F'- 


HG 

Z59 
fin 


UC-NRLF 


C    5    bflM    fi31 


O 
CO 

O 


IN  1810  when  the  MECHANICS  BANK  of  NEW 
YORK  came  into  existence,  the  young  Republic  was 
more  in  need  of  a  credit  system  than  a  money  system. 
Its  founders  endeavored  to  render  such  service  as  to  insure 
the  best  possible  results  in  the  development  of  a  credit 
system  and  the  country's  resources;  and  their  successors 
are  as  desirous  now  of  being  of  equal  service  in  securing 
a  sound  monetary  system.  Correspondents  have  every 
assurance  they  will  receive  the  same  courteous  treatment 
that  patrons  have  received  for  over  ONE  HUNDRED 
years. 

The 
Mechanics  and  Metals  National  Bank 

New  York 

Capital,  Surplus  and  Profits  .  $  1 4,000,000 
OFFIC  ER  S 


GATES  W.  McGARRAH 
President 

ALEXANDER  E.  ORR 

Vice-President 

NICHOLAS  F.  PALMER 

Vice-President 

FREDERIC  W.  ALLEN 

Vice-President 

FRANK  O.  ROE 

Vice-President 


WALTER  F.  ALBERTSEN 
Vice-President 

JOSEPH  S.  HOUSE 
Cashier 

ROBERT  U.  GRAFF 

Assistant  Cashier 

JOHN  ROBINSON 

Assistant  Cashier 

CHARLES  E.  MILLER 

Assistant  Cashier 


L©m]paiiuy 


NEW  YORK 

B'way  at  73d  St.     55  Cedar  St.     125th  St.  at  8th  Ave. 

Capital  &  Surplus,       $6,000,000 
Total  Resources,   -    $76,000,000 


Officers 


John  W.  Flatten, 
Calvert  Brewer, 
Carl  G.  Rasmus, 
Frank  J.  Farsons, 
Joseph  Adams, 
Alexander  Fhillips, 
Henry  L.  Servoss, 
T.  W.  B.  Middleton, 
Victor  Ehrlicher, 
Harry  W.  Hadley, 
Chauncey  H.  Murphey, 
William  T.  Law, 


President 
Vice-President 
Vice-President 
Vice-President 
Treasurer 
Secretary 
Asst.  Treasurer 
Asst.  Secretary 
Asst.  Secretary 
Asst.  Treasurer 
Asst.  Treasurer 
Asst.  Secretary 


Directors 


CHARLES  S.  HROWX,   Douglas  Robinson-Charles  S. 
Brown  Company New  York 

BURNS  D.   CALDWELL,    President  Wells    Fargo  & 
Company New  York 


ADOLPH  LEWISOHN, 
Sons         .         .         . 


JAMES     G. 
Bank 


CANNON,     President    Fourth     National 
New  York 


LEWIS  L.  CLARKE,  President  American  Ex.  National 
Bank New  York 

THOMAS  DEWITT  CUYLER,   President  Commercial 
Trust  Company Philadelphia 

CHARLES  D.  DICKEY, 
Company         .         '         .         .         . 

ALLEN  B.  FORBES,  Harris,  Forbes  &  Co.,  New  York 

ROBERT  A.  GRANNISS  .        .        .        New  York 

HENRY  R.  ICKELHEIMER 

Ickelheimer  &  Company. 

WILLIAM  A.  JAMISON,  Arbuckle  Bros.,   New  York 


ROBERT  OLYPHANT     . 

JOHN  W.  PLATTEN 

MORTIMER  L.  SCHIFF 
&  Company     .        .        .        . 


Adolph  Lewisohn  & 
New  York 


New  York 

President  of  the  Company 

Kuhn,  Loeb 
New  York 


HENRY  TATNALL, 

Company 


Vice-President  Penn.  R.  R. 
Philadelphia 


l'>rown  Brothers  & 
New  York 


Heidelbach, 
New  York 


LOUIS  C.  KRAUTHOFF 
Law         .         .         .         .         . 


.  Counsellor-at- 
New  York 


JULIUS  KRUTTSCHNITT  .  .  .  Directorof 
Maintenance  and  Operation,  Union  and  Southern  Pacific 
Systems New  York 


EBEN  B.  THOMAS,         President  Lehigh  Valley  R.  R. 
Company New  York 

JAMES  TIMPSON,       Second  Vice-Prest.  and  Financial 
Mgr.  The  Mutual  Life  Insurance  Company        New  York 

GUY  E.  TRIPP,  Chairman  of  the  Board  Westingliouse 
Electric  and  Manufacturing  Company  .        New  York 

ARTHUR  TURN  BULL,  Post  &Flagg    .        New  York 

CORNELIUS  VANDERBILT         .        .        New  York 

PAUL  M.  WARBURG,  Kuhn,  Loeb  &  Co.,     New  York 


GEORGE  G.  WARD, 

Cable  Company 


First  Vice-Prest.  Commercial 
New  York 


Member  N.  Y.  Clearing   House  Association 


III 


'm^/lmi 


H^.M^*^ 


The  Bank  of  North  America 


(NfiUnna]  Rank") 


cessive  r 
and  cust 
consister 


ED  AND 
NE  CON- 
^EARS  of 
fred  its  pa- 
cing princi- 
the  BANK 
5RICA  in 
e  city  that 
"Cradle  of 
Each  suc- 
principles, 
'y  courtesy 


312 


Loans  and  Discounts    $  1 2,892,43 1 .79 

Due  from  Banks  and 
Bankers 

Clearing  House  Ex- 
changes 

Cash  and  Reserve     - 


2,310,876.13 


978,600.92 
3,072,341.02 


Total 


$19,254,249.86 


Capital     - 

Surplus    and     Undi 

vided  Profits 
Circulation 
Deposits  - 
Total 


$   1,000,000.00 

2,726,298.17 
494,900.00 

-  15,033,051.69 

-  $19,254,249.86 


Officers 

H.  G.  MICHENER,  President 
S.  D.  JORDAN,  Cashier  R.  S.  McKINLEY,  Asst.  Cash. 

W.  J.  MURPHY,  Asst.  Cash.  C.  M.  PRINCE,  Asst.  Cash. 


CHARTERED  1822 


The  Farmers'  Loan  and  Trust  Company 


1 6,  1 8,  20  &  22  WILLIAM  STREET 

BRANCH   OFFICE,  475   FIFTH   AVENUE 

NEW  YORK 


LONDON 
15  COCKSPUR   ST.,  S.  W. 
26  OLD   BROAD   ST.,  E.  C. 


PARIS 
41    BOULEVARD   HAUSSMANN 


THE  Company  is  a  legal  depositary  for  moneys  paid  into  Court, 
and  is  authorized  to  act  as  Executor,  Administrator,  Trustee, 
Guardian,  Receiver,  and  in  all  other  fiduciary  capacities. 
Acts   as    Trustee    under    Mortgages    made    by    Railroad    and    other 
Corporations,   and   as   Transfer   Agent   and    Registrar    of  Stocks 
and  Bonds. 
Receives  deposits  upon  Certificates  of  Deposit,  or  subject  to  check  and 

allows  interest  on  daily  balances. 
Manages  Real  Estate  and  lends  money  on  bond  and  mortgage. 
Will  act  as  Agent  in  the  transaction  of  any  approved  financial  business. 
Depositary  for   Legal   Reserves  of  State   Banks  and  also  for  moneys 
of  the  City  of  New  York. 

Fiscal  Agent  for  States,  Counties  and  Cities. 

Foreign  Exchange,  Cable  Transfers. 

Letters  of  Credit  payable  throughout  the  world. 


HENRY  A.  C.  TAYLOR 
CHARLES  A.  PEABODY 
WM.  WALDORF  ASTOR 
OGDEN  MILLS 
FRANKLIN  D.  LOCKE 
J.  WILLIAM  CLARK 
GEORGE  F.  BAKER 
A.  G.  AGNEW 
SAMUEL  SLOAN 


BOARD  OF  DIRECTORS 

CLEVELAND  H.  DODGE 
HUGH   D.  AUCHINCLOSS 
D.  H.  KING,  Jr. 
PERCY   A.  ROCKEFELLER 
EDWARD  R.  BACON 
AUGUSTUS  V.  HEELY 
JOHN  J.  RIKER 
JOHN  W.  STERLING 
THOMAS  THACHER 


MOSES  TAYLOR   PYNE 
STEPHEN  S.  PALMER 
HENRY   HENTZ 
H.  V.  R.  KENNEDY 
FRANK  A.  VANDERLIP 
JAMES  A.  STILLMAN 
ARCHIBALD   D.  RUSSELL 
PERCY  CHUBB 
EDWIN  S.  MARSTON 


OFFICERS 


EDWIN  S.  MARSTON, 

PRESIDENT. 

SAMUEL  SLOAN, 

vice-pres't. 
AUGUSTUS  V.  HEELY, 

vice-pres't  k.  sec'y. 
WILLIAM   B.  CARDOZO, 

vice-pres't. 


CORNELIUS  R.  AGNEW, 

vice-pres't. 
HORACE  F.  HOWLAND, 

ASST.    sec'y. 

ROBERT  E.  BOYD, 

ASST.    sec'y. 

WILLIAM  A.  DUNCAN, 

ASST.    sec'y. 


n     Of  V   ''' 


IN  1810  when  the  MECHANICS  BANK  of  NEW 
YORK  came  into  existence,  the  young  Republic  was 
more  in  need  of  a  credit  system  than  a  money  system. 
Its  founders  endeavored  to  render  such  service  as  to  insure 
the  best  possible  results  in  the  development  of  a  credit 
system  and  the  country's  resources;  and  their  successors 
are  as  desirous  now  of  being  of  equal  service  in  securing 
a  sound  monetary  system.  Correspondents  have  every 
assurance  they  will  receive  the  same  courteous  treatment 
that  patrons  have  received  for  over  ONE  HUNDRED 
years. 

The 
Mechanics  and  Metals  National  Bank 

New  York 

Capital,  Surplus  and  Profits  .  $  I  4,000,000 
OFFIC  ER  S 


GATES  W.  McGARRAH 
President 

ALEXANDER  E.  ORR 

Vice-President 

NICHOLAS  F.  PALMER 

Vice-President 

FREDERIC  W.  ALLEN 

Vice-President 

FRANK  O.  ROE 

Vice-President 


WALTER  F.  ALBERTSEN 
Vice-President 

JOSEPH  S.  HOUSE 
Cashier 

ROBERT  U.  GRAFF 

Assistant  Cashier 

JOHN  ROBINSON 

Assistant  Cashier 

CHARLES  E.  MILLER 

Assistant  Cashier 


©irMa^©  &Tif  est 
C®mp®iruy 


NEW  YORK 

B' way  at  73d  St.     55  Cedar  St.     1 25th  St.  at  8th  Ave. 

Capital  &  Surplus,       $6,000,000 
Total  Resources,   -    $76,000,000 


Officers 


John  W.  Flatten, 
Calvert  Brewer, 
Carl  G.  Rasmus, 
Frank  J.  Farsons, 
Joseph  Adams, 
Alexander  Phillips, 
Henry  L.  Servoss, 
T.  W.  B.  Middleton, 
Victor  Ehrlicher, 
Harry  W.  Hadley, 
Chauncey  H.  Murphey, 
William  T.  Law, 


President 
Vice-President 
Vice-President 
Vice-President 
Treasurer 
Secretary 
Asst.  Treasurer 
Asst.  Secretary 
Asst.  Secretary 
Asst.  Treasurer 
Asst.  Treasurer 
Asst.  Secretary 


Directors 


CHARLES  S.  BROWN,  Douglas  Robinson-Charles  S. 
Brown  Company New  York 

BURNS  D.  CALDWELL,  President  Wells  Fargo  & 
Company New  York 

JAMES  G.  CANNON,  President  Fourth  National 
Bank New  York 

LEWIS  L.  CLARKE,  President  American  Ex.  National 
Bank New  York 

THOMAS  DEWITT  CUYLER,  President  Commercial 
Trust  Company Philadelphia 

CHARLES  D.  DICKEY,  .  Brown  Brothers  & 

Company         .         "         .         .         .         .         .         New  York 

ALLEN  B.  FORBES,  Harris,  Forbes  &  Co.,  New  York 

ROBERT  A.  GRANNISS  .        .        .        New  York 

HENRY  R.  ICKELHEIMER  .  Heidelbach, 
Ickelheimer  &  Company New  York 

WILLIAM  A.   JAMISON,  Arbuckle  Bros.,   New  York 

LOUIS  C.  KRAUT  HO  FF  .        .         .  Counsellor-at- 

Law         .        .        .        .         .         .        .        .        New  York 

JULIUS  KRUTTSCHNITT  .  .  .  Directorof 
Maintenance  and  Operation,  Union  and  Southern  Pacific 
Systems  .......         New  York 


ADOLPH  LEWISOHN, 

Sons        .        .        . 


ROBERT OLYPHANT     . 

JOHN  W.  FLATTEN 

MORTIMER  L.  SCHIFF 
&  Company     .        .         .        . 


Adolph  Lewisohn  & 
New  York 


New  York 

President  of  the  Company 

Kuhn,  Loeb 
New  York 


HENRY  TATNALL, 

Company 


Vice-President  Penn.  R.  R. 
Philadelphia 


EBEN  B.  THOMAS, 
Company 


President  Lehigh  Valley  R.  R. 
New  York 


JAMES  TIMPSON,       Second  Vice-Prest.  and  Financial 
Mgr.  The  Mutual  Life  Insurance  Company        New  York 

GUY  E.  TRIPP,  Chairman  of  the  Board  Westingliouse 
Electric  and  Manufacturing  Company  .         New  York 

ARTHUR  TURNBULL,  Post  &  Flagg    .        New  York 

CORNELIUS  VANDERBILT         .        .        New  York 

PAUL  M.  WARBURG,  Kuhn,  Loeb  &  Co.,     New  York 

First  Vice-Prest.  Commercial 
New  York 


GEORGE  G.  WARD, 

Cable  Company 


Member  N.  Y.  Clearing   House  Association 


III 


SEABOARD    ^  '  ^S*^' 
NATiOKLA\L  BAMK 
oRG.f'rocccLx;c>xjji 


The   Seaboard    National    Bank 

of  New  York 

with  nearly  thirty  years  of  continued 
and  substantial  growth,  with  no  con- 
solidations or  mergers  with  other  banks, 
with  no  single  interest  to  serve,  is  con- 
fident that  its  excellent  facilities  will 
meet  your  requirements. 

We  will  demonstrate  this  to  your 
utmost  satisfaction  if  you  will  give  us 
an  opportunity. 

Capital  ....  1 1,000,000 
Surplus  and  Profits  (Earned)  2,183,000 
Deposits     ....     37,000,000 


IV 


FOURTH  STREET 
NATIONAL  BANK 

Philadelphia 


Capital   . 

Surplus  and  Profits 


$  3,000,000 
6,500,000 


Offers  Unexcelled  Facilities  to  Correspondents 


OFFICERS 

E.  F.  SHANBACKER,  President 
JAMES  HAY,  Vice-President  R.  J.  CLARK,  Cashier 

B.  M.  FAIRES,  Vice-President  W.  A.  BULKLEY,  Assistant  Cashier 

FRANK  G.  ROGERS,  Vice-President  W.  K.  HARDT,  Assistant  Cashier 

C.  F.  SHAW,  Jr.,  Assistant  Cashier 


DIRECTORS 


JAMES  HAY, 

President  Merchants  Warehouse  Co, 


FRANK  T.  PATTERSON, 

North  American  Building 
CHARLES  I.  CRAGIN, 

Forrest  Building 
WILLIAM  A.  DICK, 

North  American  Building 
EFFINGHAM  B.  MORRIS, 

President  Girard  Trust  Co. 
WM.  R.  NICHOLSON, 

President  Land  Title  and  Trust  Co. 
RUDULPH  ELLIS, 

President  Fidelity  Trust  Co. 
CLEMENT  A.  GRISCOM, 

Land  Title  Building 
FRANCIS  I.  GOWEN, 

General  Counsel  Pennsylvania  R.  R.  Co. 


SIDNEY  F.  TYLER,  Chairman 

ARTHUR  E,  NEWBOLD, 

of  Drexel  &  Co.,  Bankers 
ISAAC  H.  CLOTHIER, 

Eighth  and  Market  Streets 
ALBA  B.  JOHNSON, 

President  The  Baldwin  Locomotive  Works 
C.  S.  W.  PACKARD, 

President  Pennsylvania  Company  for  Insurances 
on  Lives  and  Granting  Annuities 
E.  F.  SHANBACKER, 

President 
J.  M.  WILLCOX, 

Vice-President  Philadelphia  Saving  Fund  Society 

T.  C.  du  PONT, 

President  E.  I.  du   Pont  de  Nemours   Powder 
Company 
E.  W.  CLARK, 

of  E.  W.  Clark  &  Co.,  Bankers 


The  Girard  National  Bank 

Philadelphia 

ONE  HUNDRED  YEARS  AGO, 
in  1812,  Stephen  Girard,  who 
was  the  most  eminent  merchant  and 
the  wealthiest  man  in  the  United  States, 
established  Stephen  Girard' s  Banking 
\W^  ^^^^m  House^  on  Third  Street,  in  Philadelphia, 
in  the  elegant  building  erected  and 
occupied  from  1795  to  1 8 1 1  by  the 
Stephen  Girard  Arst   BANK   OF  THE    UNITED 

Born  1750      Died  1831       STATES.      George  Simpson,  who  for 

seventeen  years  was  cashier  of  the  Bank  of  the  United  States, 
was  Mr.  Girard's  first  cashier.  Mr.  Girard's  death  occurred 
in  December  1831.  Shortly  thereafter  in  1832,  a  number 
of  Philadelphia's  most  prominent  citizens  organized  The 
Girard  Bank,  taking  over  the  magnificent  building  and 
occupying  it  from  that  day  to  this.  It  became  THE 
GIRARD  NATIONAL  BANK  in  1864,  and  its  success 
can  be  attributed  to  the  service  it  renders  its  patrons. 

Capital $2,000,000 

Surplus  and  Profits      .       .       .  4,700,000 

Deposits 42,000,000 

Resources 51,000,000 


VI 


Continental  and  Commercial 
National  Bank 

OF  CHICAGO 

Northeast  Corner  Adams  and  Clark  Streets 

Capital,    Surplus   and    Undivided   Profits,   $30,000,000.00 

OFFICERS 

GEORGE  M.  REYNOLDS,  President 

RALPH  VAN  VECHTEN,  Vice-President  HARVEY  C.  VERNON,  Asst.  Cashier 

ALEX.  ROBERTSON,  Vice-President  GEO.  B.  SMITH,  Asst.  Cashier 

HERMAN  WALDECK,   Vice-President  WILBER  HATTER Y,  Asst.  Cashier 

JOHN  C.  CRAFT,  Vice-President  H.  ERSKINE  SMITH,  Asst.  Cashier 

JAMES  R.  CHAPMAN,  Vice-President  JOHN  R.  WASHBURN,  Asst.  Cashier 

WM.  T.  BRUCKNER,  Vice-President  WILSON  W.  LAMPERT,  Asst.  Cashier 

WM.  G.  SCHROEDER,  Vice-President  DAN  NORMAN,  Asst.  Cashier 

NATHANIEL  R.  LOSCH,  Cashier  FRANK  L.  SHEPARD,  Auditor 
EDWARD  S.  LACEY,  Chairman  of  Advisory  Committee 


Continental    and   Commercial   Trust 
and  Savings  Bank 

Capital  and  Undivided  Profits,  $4,300,000.00 

OFFICERS 

GEORGE  M.  REYNOLDS,  President  CHARLES  C.  WILSON,  Cashier 

JOHN  J.  ABBOTT,  Vice-President  FRANK  H.  JONES,  Secretary 

GEORGE  B.  CALDWELL,  Vice-President  WM.  P.  KOPF,  Asst.  Secretary 


The  Hibernian  Banking  Association 

Capital,  Surplus  and  Undivided 
Profits,    $2,900,000.00 

OFFICERS 

GEORGE  M.  REYNOLDS,  President  JOHN  W.  MacGEAGH,  Cashier 

DAVID  R.  LEWIS,  Vice-President  FREDERIC  S.  HEBARD,  Secretary 

HENRY  B.  CLARKE,  Vice-President  and  Man-  EVERETT  R.  McFADDEN,  Asst.  Secretary 

ager  Savings  Dept.  JOHN  P.  V.  MURPHY,  Asst.  Cashier 

LOUIS  B.  CLARKE,  Vice-President  GEORGE  ALLAN,  Asst.  Cashier 


Combined  Capital,  Surplus  and  Undivided  Profits 

$37,000,000.00 

Resources  of  Affiliated  Institutions  Over 
One-Quarter  Billion  Dollars 


VII 


|UIETL  1  but  surely,  m  tne  last 
rew  years,  Chicago  nas  oeen  ac- 
quiring approximately  the  same 
relation  to  tne  xV^estern  and 
Northwestern  sections  or  tne 
country  that  London  bears  toward  tne  trade 
or  the  Britisn  empire.  The  money  or  the 
western  nair  or  tnis  continent  is  employed  in 
commerce,  rounded  on  a  vast  and  growing 
agriculture.  It  is  not  used  m  speculative 
ventures  but  is  at  the  call  or  all  legitimate 
enterprises  in  developing  new  areas  and  new 
markets.  To  all  this  extraordinarily  ricb, 
though  still  young  territory,  tbe  banking  pow- 
er or  Cnicago  supplies  strength  and  vitality, 
and  AviU  continue  to  do  so,  keeping  in  tbe  lead 
or  tbe  growtb  or  populations  and  industries. 
iFTbe  vista  is  so  broad,  so  far  reacbing  and 
so  xuU  or  growing  influence  tbat  fcAV  of  tbose 
most  actively  concerned  realize  wbat  it  means 
now,  mucb  less  wbat  it  means  to  tbe  future 
of  a  country  wbose  advance  in  wealtb  and 
power  IS  one  of  tbe  wonders  of  bistory. 

REPRODUCED  FROM  A  RECENT  PUBLISHED  STATEMENT  OF 

The  National  Bank  of  the  Republic  of  Chicago 

JOHN  A.  LYNCH President                 W.  T.  FENTON     ....  Vice-President 

R.  M.  McKINNEY Cashier                 O.  H.  SWAN Asst.  Cashier 

JAMES  M.  HURST    .     .     .        Asst.  Cashier                 WM.  B.  LAVINIA     .     .     .  Asst.  Cashier 
W.  S.   BISHOP     ...           Asst.  Cashier 


VIII 


m 


A  concise  review  of  the  monetary  systems  of  the 
leading  nations  of  the  world,  illustrating  the  fund- 
amental differences  between  the  various  systems. 
W^ith  a  copy  of  the  charter  of  the  Second  Bank  of 
the  United  States,  and  a  discussion  of  the  Monetary 
Commission  bill  now  before  Congress. 


By  MAURICE  L.  MUHLEMAN 


American   Bankers'  Association 
Year-Book   1912 


Published    by 


The  Banking  Law  Journal 

27  Thames  Street,  New  York 

1912 


Copyright,  iqi2,  by  the  Banking  Law  Journal  Co.,  New  York. 


FOUNDED 
1803 


The  Merchants  National  Bank 

of  the 

City  of  New  York 
42  Wall  Street 

THE  Merchants  National  Bank  of  the 
City  of  New  York  offers  as  a  basis  of  busi- 
ness connection,  a  hundred  years  of  success, 
conservative  management,  complete  banking 
equipment,  prompt  and  courteous  attention,  and 
an  independence  which  permits  of  all  business 
being  considered  strictly  upon  its  merits. 


DIRECTORS 


JOHN  A.  STEWART.  Chairman  Board  of  Trustees 
United  States  Trust  Co. 

ELBERT  A.  BRINCKERHOFF,  Vice-President 
J.  Spencer  Turner  Co. 

GUSTAV  H.  SCHWAB 

Oelrichs  &  Co.,  Agents  North  German  Lloyd  S.S.  Co. 

-ROBERT  M.  CALLAWAY,  President 

CHARLES  D.  DICKEY 

Brown  Brothers  &  Co.,  Bankers 

EDWARD  HOLBROOK 

President  Gorham  Manufacturing  Co. 


JOSEPH  W.  HARRIMAN.  Vice-President 

Harriman  &  Co.,  Bankers 
WILUAM  A.  TAYLOR 

Taylor,  Clapp  &  Co. ,  Dry  Goods  Commission 

GEORGE  ZABRISKIE 

Zabriskie,  Murray,  Sage  &  Kerr,  Lawyers 

JAMES  N.  WALLACE 

President  Central  Trust  Co.  of  New  York 
CHARLES  A.  BOODY 

President  The  Peoples  Trust  Co.  of  Brooklyn 

JAMES  C.  COLGATE 

James  B.  Colgate  &  Co.,  Bankers 


Resources  over  $30,000,000 


X 


THE  BANK  OF  COMMERCE 

NATIONAL  ASSOCIATION 
CLEVELAND 

ORGAKIZED  IX  1899.  HAVING  A  CAPITAI.,  SUR- 
PLUS AND  PROFITS  OF  THRFE  MLLL.ION  SEVEN 
HUNDRED  THOUSAND  DOLLARS,  AND  RESOUR- 
CES OF  TWENTY  MILLION  DOLLARS,  IT  IS 
THOROUGHLY  EQUIPPED  FOR  TRANSACTING 
ALL  BRANCHES  OF  LEGITIMATE  BANKING, 
AND  CORDIALLY  INVITES  CORRESPONDENCE 
WITH  OUT-OF-TOWN  BANKS,TRUST  COMPANIES, 
CORPORATIONS  AND  FIRMS,  REQUIRING  A 
CLEVELAND  CONNECTION,  CONFIDENTLY  BE- 
LIEVING IT  CAN  RENDER  SERVICE  THAT  WILL 
MERIT  THEIR  PATRONAGE.  ITS  DIRECTORATE 
IS  COMPOSED  OF  SOME  OF  CLEVELAND'S  MOST 
REPRESENTATIVE  BANKERS  AND  BUSINESS 
MEN;  AN  ASSURANCE  OF  A  FAITHFUL  PER- 
FORMANCE OF  ALL  TRUSTS. 


257832 


XI 


THE  Comptroller  of  the  Currency  nas  assigned  to  tne 
First  National  Sank  or  Cleveland  the  number  seven, 
its  original  charter  number,  -wnich  designates  tnis  in- 
stitution as  one  or  tne  oldest  national  banks  in  tne  country. 
It  nas  bad  an  uninterrupted  period  or  bealtby,  permanent 
growth  since  its  organization  in  1863,  rrom  which  it  is  safe 
to  conclude  tbat  tne  service  rendered  to  its  customers  bas  been 
agreeable  and  satisfactory.  W'ltb  a  capital  and  surplus  of 
more  tban  $4,000,000,  and  total  resources  of  $36,000,000, 
it  IS  prepared  to  grant  sucb  accommodation  as  may  be  iivar- 
ranted  by  tbe   standing   and   responsibility   of  tbe   depositor. 


XII 


First  National  Bank  Building 

MILWAUKEE,  WIS. 

FUTURE  HOME  OF 

THE  FIRST  NATIONAL  BANK 

OF  MILWAUKEE 
FIRST   SAVINGS  &.  TRUST   COMPANY 


XIII 


inon: 


T 


HE    progress  and   substantial   growth 

of  the  city  of  Cleveland^  Ohio, 

and  the  success  of  its  many  great 
industrial  and  manufacturing  enter- 
prises, can  be  attributed  largely  to  its  excellent 
banking  facilities. 


The  Union  National  Bank 

of  Cleveland 

through  strict  adherence  to  up-to-date  banking 
methods,  has  become  one  of  the  foremost 
banking  institutions  in  the  State.  Banks, 
Corporations,  Firms  and  Individuals  desiring  a 
Cleveland  connection,  can  be  assured  of  every 
courtesy  in  keeping  with  sound  banking 
principles. 


OFFICERS 

GEO.  H.  WORTHINGTON 

E.  R.  FANCHER 

G.  A.  COULTON 

W.  E.  WARD    . 

W.  C.  SAUNDERS 

E.  E.  CRESWELL 


President 

Vice-President 

Cashier 

Assistant  Cashier 

Assistant  Cashier 

Assistant  Cashier 


XIV 


XV 


ORGANIZED  1850 

MARINE 
NATIONAL  BANK 

BUFFALO,  N.  Y. 

(    Paid  in $     500,000.00 

^^'^^    '(    Earned 1,500.000.00  $  2,000.000.00 

Surplus  and  Profits  (Earned)          1.500.000.00 

Total  Assets  (Over) 36,000,000.00 

The   oldest  bank   of  discount  in   Buffalo  and  the  largest  in  the 
State  outside  of  New  York  City. 


OFFICERS 

STEPHEN  M.  CLEMENT.  President  CLIFFORD  HUBBELL.  Cashier 

JOHN  J.  ALBRIGHT.  Vice-President  HENRY  J.  AUER,  Assistant  Cashier 

JOHN  H.  LASCELLES,  Vice-President  NORMAN  P.  CLEMENT,  Assistant  Cashier 

MERLE  H.  DENISON.  Assistant  Cashier 


JOHN  J.  ALBRIGHT 
STEPHEN  M.  CLEMENT 
WALTER  P.  COOKE 
WILLIAM  H.  GRATWICK 
A.  C.  GOODYEAR 


DIRECTORS 

EDMUND  HAYES 
WILUAM  H.  HOTCHKISS 
CLIFFORD  HUBBELL 
E.  H.  HUTCHINSON 
GEORGE  B.  MATHEWS 


CHARLES  H.  KEEP 
HUGH  KENNEDY 
JOHN  H.  LASCELLES 
WILUAM  A.  ROGERS 


This  Bank  solicits  the  accounts  of  banks,  corporations,  firms,  and 

individuals.     Every  effort  is  made  by  courteous  personal 

attention    to    give    customers    the    most 

prompt   and   efficient  service 

CORRESPONDENCE  INVITED 


XVI 


THE  progress  of  a  banking  institution  in  one   of 
the  great  money  centers,  where  competition  is 
extremely  keen,  depends   upon  its  management 
and  equipment  for  handling  business. 

The  National  City  Bank 

of  Chicago 

is    less    than   six   years    old,    and  its   resources   are  now 

Thirty-four  Millions  which  represent  a  record-breaking 

growth  in  American  Banking.      It  opened  for  business 

February  5,  1907,  with  deposits  of  $2,198,337.25.    The 

following  table  shows  their  growth: 

.  $6,201,815.87 

.  12,344,125.88 

,  15,243,602.94 

.  22,965,928.59 

.  27,524,223.90 

.  31,041,046.16 

Surplus  and  Profits  $603,771.99 


December  31,  1907 
December  31,  1908 


December  31,  1909 
December  31,  1910 
December  31,  1911 
June  14,  1912 


Capital  $2,000,000.00 


OFFICERS: 
DAVID  R.  FORGAN,  President 


ALFRED  L.  BAKER,  Vice-President 

H.  E.  OTTE,  Vice-President 

F.  A.  CRANDALL,  Vice-President 

L.  H.  GRIMME,  Cashier 

W.  T.  PERKINS,  Asst.  Cashier 

W.  D.  DICKEY,  Asst.  Cashier 


HENRY  MEYER,  Asst.  Cashier 
A.  W.  MORTON,  Asst.  Cashier 
WM.  N.  JARNAGIN,  Asst.  Cashier 
WALKER  G.  McLAURY,  Asst.  Cashier 
R.  U.  LANSING,  Mgr.  Bond  Dept. 
M.  K.  BAKER,  Asst.  Mgr.  Bond  Dept. 


XVII 


Fort 
Dearborn 
National 

Bank 

United  States  Depositary  —  Security  and  Conservatism 


Fort 
Dearborn 

Trust  and 

Savings 

Bank 


Capital  ....  $2,000,000.00 
Surplus  and  Profits  600,000.00 
Deposits  ....    28,000,000.00 


OFFICERS 

WM.  A.  TILDEN      .    .    . 


.  .  President 
Vice-President 
Vice-President 
.  .  .  Cashier 
Asst.  Cashier 
Asst.  Cashier 
Asst.  Cashier 
Asst.  Cashier 


NELSON  N.  LAMPERT     . 

J.  FLETCHER  FARRELL 

HENRY  R.  KENT   .... 

GEORGE  H.  WILSON  .    . 

CHARLES  FERNALD       . 

THOMAS  E.  NEWCOMER 

WM.  W.  LE  GROS    .    .    . 

HARRY  LAWTON    .    .  Mgr.  Foreign  Dept. 

Comparative  Showing  of 
Deposits 

February  14,  1908 $9,887,954.84 

February  5,  1909 11,617,691.24 

March  29,  1910 15,041,357.21 

March  7,  1911 21,574,956.79 

June  7,  1911 23,137,746.88 

September  1,1911 24,500,075.82 

December  5,  1911 25,445,199.89 

February  20,  1912 26,207,446.32 

April  18,  1912 27,287,752.30 

June  14,  1912 28,433,836.35 


Three  per  cent,  interest  on  savings 
accounts. 

Deposits  made  on  or  before  the  tenth  of 
each  month  bear  interest  from  the  first. 

The  officers  of  the  Fort  Dearborn  Trust 
and  Savings  Bank  offer  their  services  to 
clients  who  are  seeking  choice  high  grade 
bonds  and  seasoned  securities. 

Acts  as  Administrator,  Executor,  Guar- 
dian, Conservator,  Assignee,  Receiver, 
Transfer  Agent  and  Registrar. 

In  fiduciary  capacity  as  agent  makes  in- 
vestments, collections  and  disbursements. 


OFFICERS 

WM.  A.  TILDEN President 

NELSON  N.  LAMPERT     .    .  Vice-President 

JOHN  E.  SHEA Cashier 

CHAS.  A.  TILDEN Asst.  Cashier 

STANLEY  G.  MILLER  .    .  Mgr.  Bond  Dept. 
E.  C.  GLENNY  .    .     Secy,  and  Trust  Officer 


SAFE  DEPOSIT  VAULTS 

HERBERT  C.  ROER,  Manager 


We  invite  the  accounts  of  Banks,  Individuals,  Corporations  and  Firms 
who  appreciate  banking  efficiency.      Personal  and  Courteous  attention 

MONROE  AND  CLARK   STREETS 


XVIII 


Capital,  $2,000,000.00 

Surplus,  $2,000,000.00 

Deposits,  $35,000,000.00 


C.  H.  Huttig,  President 

F.  O.  Watts,  Vice-Prest. 

Thos.  Wright,  Vice-Prest. 

R.  S.  Hawes,  Vice-Prest. 

G.  W.  Galbreath,  Vice-Prest. 


J.  R.  Cooke,  Cashier 

D'A.  P.  Cooke,  Assistant  Cashier 

H.  Haill,  Assistant  Cashier 

E.  C,  Stuart,  Assistant  Cashier 


XIX 


First  National  Bank 


Minneapolis,  Minnesota 


Capital 

Surplus  and  Profits 

Deposits 


$2,000,000.00 

2,500,000.00 

23,000,000.00 


Officers 

F.  M.  PRINCE 
C.  T.  JAFFRAY 


A.  A.  CRANE 
GEO.  F.  ORDE 
D.  MACKERCHAR 
H.  A.  WILLOUGHBY 


President 
Vice-President 
Vice-President 
Vice-President 
Vice-President 
Cashier 


G.  A.  LYON 
P.  J.  LEEMAN 


Assistant  Cashier 
Assistant  Cashier 


Established  1864 


XX 


The  Corn  Exchange  National 
Bank  of  Chicago 


Capital  .  .  .  . 
Surplus  .  .  .  . 
Undivided  Profits  . 


^3, 000,000.00 

5,000,000.00 

975,000.00 


Offii 


cers 


ERNEST  A.  HAMILL,  President 
CHARLES  L.  HUTCHINSON  Vice-President        CHAUNCEY  J.  BLAIR,  Vice-President 
D.  A.  MOULTON      .        .        .    Vice-President        B.  C.  SAMMONS         .     Vice-President 
FRANK  W.  SMITH  .        .  Cashier        JOHN  C.  NEELY  .     Secretary 

J.  EDWARD  MAASS       .        Assistant  Cashier        JAMESG. WAKEFIELD,  Ass'tCashier 
LEWIS  E.  GARY,  Ass't  Cashier 


Directors 


CHARLES  H.  WACKER 
CHAUNCEY  J.  BLAIR 
EDWARD  B.  BUTLER 
CLARENCE  BUCKINGHAM 
CLYDE  M.  CARR 
WATSON  F.  BLAIR 
EDWARD  A.  SHEDD 


MARTIN  A.  RYERSON 
CHARLES  H.  HULBURD 
BENJAMIN  CARPENTER 
EDWIN  G.  FOREMAN 
CHARLES   L.   HUTCHINSON 
FREDERICK  W.  CROSBY 
ERNEST  A.  HAMILL 


Foreign   Exchange 

Letters    of    Credit 

Cable  Transfers 


XXI 


Resources,  $6,500,000.00 

4 

THE 

^ 

PEOPLES 

BANK 

OF 

BUFFALO 

—^ — 

-, 

TF  intelligent  handling  of  items 

"■■    and   low  rates    appeal   to  you 

send    us     your     Buffalo    business. 

A.  D.  BISSELL,  President 

C.  R.  HUNTLEY,  Vice-President 

E.  J.  NEWELL,  Cashier 

HOWARD  BISSELL,  Asst.  Cashier 

C.  G.  FEIL,  Asst.  Cashier 

XXII 


The   First  National   Bank 

of  Buchanan    County 
St.  Joseph,   Missouri 


CAPITAL 
SURPLUS 


1500,000.00 
300,000.00 


This  bank  is  located  in  the  heart  of 
the  greatest  agricultural  district  in 
the  world.  We  consistently  follow 
a  conservative  policy  and  invite 
patronage,  feeling  confident  that 
our  facilities  for  rendering  prompt 
and  efficient  service  are   unsurpassed. 

OFFICERS 
R.  T.  FORBES  -       -       -       -  President 

J.  E.  COMBS  -----  Cashier 
R.  S.  BRITTAIN  -  -  Assistant  Cashier 
R.  N.  RIDGE    -----     Auditor 


XXIII 


The 

National  Bank  of  Commerce 

in  St.  Louis 


Capital $10,000,000 

Surplus  and  Profits     .       .  2,000,000 

Deposits 57,000,000 


Accounts   of  Banks,   Corporations,   Merchants, 

Manufacturers,  and  Individuals  solicited 

upon    favorable   terms. 

Officers 

B.  F.  EDWARDS  ....  President 
TOM  RANDOLPH  .  .  .  Vice-President 
W.  B.  COWEN  .  .  .  Vice-President 
W.  L.  McDonald  .  .  .  vice- President 
J.  A.  LEWIS              .  .               .       >         .        Cashier 

C.  L.  MERRILL              .  .               Assistant  Cashier 

F.  W.  WRIEDEN    .  .               .       Assistant  Cashier 

G.  N.  HITCHCOCK  .  .  Assistant  Cashier 
A.  L.  WEISSENBORN  .  .  Assistant  Cashier 
GEORGE  R.  BAKER  .  .  Assistant  Cashier 
H.  C.  BURNETT  .  .  .  Assistant  Cashier 
W.  M.  CHANDLER      .  .               Assistant  Cashier 


XXIV 


The  Capital  National  Bank 

gf  ST.  PAUL,  MINNESOTA 


QThis  bank — conducted  in  a 
broadly  conservative  manner — 
offers  every  advantage  in  service 
and  every  consideration  consis- 
tent with  sound  banking.  A 
business  connection  with  us 
cannot  fail  to  be  of  mutual 
advantage  and  satisfaction. 
Q  Correspondence   is   invited. 


JOHN  R.  MITCHELL 

President 

JEROME  W.  WHEELER - 

Vice-President 

WILLIAM  B.  GEERY 

Vice-President 

JAMES  L.  MITCHELL 

Cashier 

EDWARD  H.  MILLER       - 

-  Ass't  Cashier 

GEORGE  M.  BRACK 

-  Ass't  Cashier 

Capital  and  Surplus,  $600,000.00         Deposits,  $5,500,000.00 


XX\" 


NATIONAL  BANK 
OF  COMMERCE 
IN    NEW    YORK 


UPON  the  merit  of  its  strong  financial  condition,  as 
evidenced  by  Capital,  Surplus  and  Undivided  Profits 
of  over  Forty  Million  Dollars,  and  upon  its  successful 
record  since  its  organization,  in  1839,  the  National  Bank  of 
Commerce  in  New  York  solicits  the  accounts  of  banks, 
bankers,  corporations,  firms,  and  individuals,  and  invites 
correspondence  from  those  who  contemplate  forming  new 
banking  connections  in  New  York.  Besides  a  thorough 
equipment  for  the  transaction  of  all  branches  of  domestic 
banking,  this  bank  has  foreign  correspondents  at  every 
important  commercial  centre  in  the  world. 


JAMES  S.  ALEXANDER 
HENRY  A.  SMITH 
R.  G.  HUTCHINS,  Jr. 
NEILSON  OLCOTT 
OLIVER  I.  PILAT 
FARIS  R.  RUSSELL 
A.  J.  OXENHAM 
STEVENSON  E.  WARD 
JOHN  H.  STODDARD 
WILLIAM  M.  St.  JOHN 
F.  BORGEMEISTER,  Mgr. 


President 
Vice-President 
Vice-President 
Cashier 
Asst.  Cashier 
Asst.  Cashier 
Asst.  Cashier 
Asst.  Cashier 
Asst.   Cashier 
Asst.   Cashier 
Foreign  Department 


NATIONAL  BANK 
OF  COMMERCE 
IN    NEW    YORK 


XX  \- 1 


The  Northwestern  National  Bank 

of  Minneapolis,  Minnesota 

is  organized  and  equipped  to  give  to  its  customers  and  corres- 
pondents the  best  banking  service  obtainable.  ^  Being  the 
largest  bank  in  its  territory  the  Northwestern  is  able  to  offer, 
through  its  many  connections,  unexcelled  facilities,  while  its 
office  organization  is  designed  to  give  to  every  patron's  affairs 
the  individual  care  and  attention  which  they  may  require. 

Capital  and  Surplus,    $5,000,000.00 

AFFILIATED  WITH 

The   Minnesota   Loan   and  Trust   Company 


XXVII 


Jfibelitp  Crus^t  Company 

CORNER   OF  CHAMBERS    STREET  &   WEST   BROADWAY 

Mt\a  |9orfe 

MEMBER     OF     THE      NEW     YORK     CLEARING      HOUSE     ASSOCIATION 


CAPITAL 
$1,000,000.00 


SURPLUS 
$1,000,000.00 


SAMUEL  S.  CONOVER,  President 

WM.  H.  BARNARD,  Vice-President  JOHN  W.  NIX,  Vice-President 

ANDREW  H.  MARS,  Secretary 

STEPHEN  L.  VIELE,  Ass't  Sec'y     ARTHUR  W.  MELLEN,  Ass't  Sec'y  CS,  Trust  Officer 


DIRECTORS 

WILLIAM  H.  BARNARD, 

Importer,  Raw  Silk 
JAMES  BUTLER, 

Pres.  James  Butler,  Inc.,  ^Vholesale  and  Retail 

Groceries 
JAMES  G.  CANNON, 

President,  Fourth  National  Bank 
SAMUEL  S.  CONOVER, 

President 
SAMUEL  CROOKS, 

Late  of  Crooks,  Thomas  CSt,  Co. 

Wholesale  Teas  and  Coffees 
"WILLIAM  C.  DEMOREST, 

President,  Realty  Trust 
JAMES  M.  DONALD, 

Chairman  of  Board,  Hanover  National  Bank 

CHARLES  F.  DROSTE, 

Droste  CS.  Snyder,  'Wholesale  Butter  and  Eggs 

W^.  J.  FULLERTON, 

■Wilson  i&  Bradbury,  Dry  Goods  Commission 

FRANK  A.  HORNE, 

President,  Merchants'  Refrigerating  Co. 

EDWIN  E.  JACKSON,  JR., 

Pres.  and  Treas.  Boorum  iB,  Pease  Co.,  Blank 
Books 

ADOLPH  KASTOR, 

A.  Kastor  CS,  Bros.,  Wholesale  Cutlery 

JAMES  H.  KILLOUGH, 

J.  H.  Killough  CS,  Co.,  W^holesale  Produce  Com- 
mission 

LEE  KOHNS, 

L.  Straus  CS,  Sons,  Pottery,  China  and  Glass- 
ware 

HENRY  KROGER, 

Henry  Kroger  C5i>  Co.,  'Wholesale  Liquors 


DIRECTORS 

CHARLES  F.  MATTLAGE, 

Chas.  F.  Mattlage  CB,  Sons,  "Wholesale  Provi- 
sions 

GERRISH  H.  MILLIKEN, 

Deering,Milliken  iS>  Co.,  Dry  Goods  Commission 

VINCENT  S.  MULFORD, 

Jewelers'  Circular  Publishing  Co. 

JAMES  E.  NICHOLS, 

Austin,  Nichols  iB.  Co.,  'Wholesale  Grocers 

JOHN  W^.  NIX, 

Pres.,  John   Nix   CS>   Co.,    'Wholesale    Produce 
Commission 

JOHN  A.  PHILBRICK, 

President,  John  A.  Philbrick  :&  Bro. 

ALEXANDER  M.  POW^ELL, 
Chocolate  Manufacturer 

STEPHEN  K.   REED, 

Vice-President,  Pettit  iS,  Reed,  'Wholesale  But- 
ter, Cheese  and  Eggs 

GEORGE  H.  SARGENT, 

Sargent  C85.  Co.,  'Wholesale  Hardware 

HAMPDEN  E.  TENER, 

President,  Irving  Savings  Institution 

ED'WARD  H.  TITUS, 

Late  Treasurer  Lord  (3S.  Taylor,  'Wholesale  £& 
Retail  Dry  Goods 

THEODORE  F.  'WHITMARSH, 

Vice-President,  F.  H.  Leggett  CS!.  Co.  Wholesale 
Grocers 

D.  "W.  'WHITMORE, 

D.  W^.  'Whitmore  C&  Co.  Wholesale  Butter  and 
Cheese 

JOHN  O.  WILLIAMS, 

Vought  <®.  Williams,  Iron  and  Steel 


Correspondence  with  banks,  trust  companies,  corporations,  firms  and 
individuals  is  invited. 

The  Company  offers  the  services  of  a  competent  organization,  supple- 
mented by  financial  security  and  a  determination  to  please. 


REMEMBER  THE  NAME 


I    t 


FIDELITY 


I  I 


SEND    US   YOUR   COLLECTIONS   AND    RECEIVE   THE   BENEFIT   OF   SPECIAL 
ATTENTION  AND  QUICK  RETURNS. 


XX\'III 


i 


ORGANIZED     1903 


UNION  EXCHANGE  NATIONAL  BANK 
uftT^NEWYORIG   • 


Capital 
and  Surplus 

$2,000,000 


Total  Resources 

$14,000,000 


HENRY  S.  HERRMAN 
President 

DAVID  NEVIUS 
Vice-President  and  Cashier 

LOUIS  J.  WEIL 
Vice-President 

GEO.  B.  CONNLEY 

Asst.  Caishier 


^  Located  in  the  heart  of  the  new  textile  manufacturing  district,  and  many  of  our 
clients  being  manufacturers  and  merchants  whose  business  extends  throughout  the 
country,  we  receive  a  large  amount  of  out-of-town  checks.  ^  Banks  that  can  handle 
to  advantage  the  items  payable  in  their  locality  are  invited    to  correspond    with  us. 

MEMBER  NEW  YORK  CLEARING  HOUSE 


UNION  NATIONAL  BANK 

PHILADELPHIA 


W.  H.  Carpenter 
President 


T.  H.  Conderman 
Vice-President 


Louis  N.  Spielberger 
Cashier 


John  W.  Mink 
Asst.  Cashier 


Capital 
$500,000 

Surplus 
$650,000 

Undivided  Protits 
$90,000 

Deposits 
$6,500,000 


ACCOUNTS    OF    BAINKS,    BANKERS,    CORPORATIONS 
ATV13    INDIVIDUALS    SOLICITED 


XXIX 


NEW  HOME  THE  INTERNATIONAL  TRUST  COMPANY 

DENVER 

The  International  Tru^  Company 

DENVER.  COLO. 

Capital  and  Surplus,  $  1 ,000,000.00 

OFFICERS      -  DIRECTORS 


H.  M.  BLACKMER 
THEO.  G.  SMITH 
F.  G.  MOFFAT  .  . 
P.  E.  CLELAND  . 


.  .  President 
Vice-President 
Vice-President 
.     .   Treasurer 


A.  V.  HUNTER,  Chairman  of  the  Board 


H.  H.  BROOKS  .  Sec'y  CEi  Trust  Officer 
F.  G.  HARRINGTON     .      Ass't  Sec'y 


H.  M.  BLACKMER 
F.  G.  MOFFAT 
GERALD  HUGHES 
THOMAS  KEELY 
CHAS.  M.  MacNEILL 
JOHN  H.  PORTER 


THEO.  G.  SMITH 
M.  D.  THATCHER 
ALVA  ADAMS 
JOHN  EVANS 
J.  H.  P.  VOORHIES 
SPENCER    PENROSE 


XXX 


Emergency  Door 

Heaviest  Vault  Doors  in  the 
World 

built  for 

Bankers  Trust 
Com  pan  y 

of  NEW  YORK 


Entire    vault    and    complete 
equipment     constructed     by 

Herring 
Hall 
Marvin 
Safe 
«        Company 

Builders  of  Bank  Vaults 


New  York  Hamilton,  O. 

Boston  Chicago 

St.  Louis  Cincinnati 

San  Francisco 


Main  Door  Closed 


Main  Door  Open 


XXXI 


The  Mutual  Benefit  Life  Insurance  Company 


1845 


of  Newark,  N.  J. 

Frederick  Frelinghuysen,   President 


I912 


The  Leading  Annual  Dividend  Company 

Satisfactory  Service  to   Policyholders  for  67  Years 

Paid  Policyholders  Since  Organization  in   1845   Over  1300,000,000 

Purely   Mutual  Liberal   Policies  Low  Rates  Large    Dividends 

New  Benefits  as  adopted  are  extended  to  old  Policyholders 

The   Mutual   Benefit's  Accelerative  Endowment  Plan  is  absolutely  unique 

and  is  unequaled 


Send  for  leaflet  "  What  Bankers   Think  of  the   Mutual  Beneft.'' 


XXX 11 


A  Trip  Through  Fairyland 

From  the  Atlantic  to  the  Pacific 

One  Hundred  Golden  Hours  at  Sea 

ON  ELEGANTLY  EQUIPPED  10,600-TON   STEAMSHIPS 

Along  the  Atlantic  Coast,  across  the  Mexican 
Gulf — from  the  American  Metropolis  to  the 
Crescent  City. 
NEW^  YORK  NEW  ORLEANS 

Along   the    Rio    Grande 

IN  TRAINS  OF  SUPERIOR  EQUIPMENT 

Through  the  vast  cotton  and  sugar  planta- 
tions of  Louisiana  and  Texas,  the  old  missions, 
the  historic  Alamo,  the  great  health  resorts, 
along  the  Rio  Grande  with  a  unique  panorama 
of  two  Republics  —  the  United  States  and 
Mexico,  through  New  Mexico  and  Arizona  to 

The  Road  of  a  Thousand  Wonders 

Through  that  most  wonderful  of  States,  Cali- 
fornia —  in  full  view  of  the  Pacific  Ocean  on 
one  side  and  miles  of  blossoming  orange  trees 
on  the  other,  continuing  over  the  world-famous 
Shasta  Route  to  Oregon  and  Washington. 

Southern  Pacific 

Superior  Service 

ALL  THE  W^AY 

Steamships  Sunset  Route 

New  York  to  New  Orleans  New  Orleans  to  San  Francisco 

Call  or  write  to 

L.  H.  Nutting,  General  Passenger  Agent 
366  Broadway  1158  Broadway  1  Broadway 

at  Franklin  Street  at  27th  Street  at  Bowline  Green 

New  York 


XXXIII 


Corner  Liberty  CS.  ^Vest  Streets 


The  Coal  &  Iron  National  Bank 

of  the  City  of  New  York 

Capital $1,000,000.00 

Surplus  and  Profits  (Earned)    -    $493,000.00 

Depositary  of  the  United  States,  City  and  State  of  New  York 
Offers  Every  Proper  Banking  Facility 

Board  of  Directors 


Francis  J.  Arend  ....  Treas.  Delaval  Separator  Co. 
■Wm.  G.  Besler,  Vice-Pres.  and  Gen.  Mgr.  C.R.R.  of  N.J. 

M.  F.  Burns Pres.  Burns  Brothers 

George  H.  Campbell  .    .  Asst.  to  Pres.  B.  ca,  O.  R.  R.  Co. 

Daniel  F.  Connor OfWhitney  ®,  Kemmerer 

Alfred  A.  Cook Leventritt,  Cook  C&  Nathan 

Henry  L.  de  Forest Of  de  Forest  Brothers 

Allison  Dodd Dir.  Burns  Brothers 

H.  ■W.  Douty  .  .  Real  Estate  Agt.  C.  R.  R.  of  N.  J. 
Joseph  A.  Fly  nn     .     .  V.-P.  Fidelity  and  Dep.  Co.  of  Md. 

W.J.Harahan Vice-Pres.  Erie  R.  R.  Co? 

George  D.  Harris George  D.  Harris  C&  Co. 

Henry  L.Joyce,  V.-P.  Interstate  Lighterage  C5!,  Trans.  Co. 
John  C.  Juhring  .  .  .  Pres.  Francis  H.  Leggett  CS.  Co. 
Albert  B.  Kerr    .     .     .     Zabriskie,  Murray,  Sage  CS,  Kerr 


E.  E.  Loomis Vice-Pres.  D.,  L.  ®.  W.  R.  R.  Co. 

James  H.  McGraw  .  .  .  Pres.  McGraw  Publishing  Co. 
John  A.  Middleton  .  .  V.-P.  Lehigh  Valley  R.  R.  Co. 
James  H.  Parker     .     .      Pres.  Mutual  Alliance  Trust  Co. 

Edwin  H.  Peck  ■ E.  H.  CS,  W.  J.  Peck 

■Wm.  B.  Randall      Pres.  Secur.  Trans,  and  Registrar  Co. 

John  T.  SprouU         President 

John  AV.  Sullivan    ....     Pres.  John 'W.  Sullivan  Co. 

■Wm.  H.  Taylor       Pres.  Goodwin  Car  Co. 

David  Taylor  Vice-President 

Stephen  H.  Voorhees      .    .     Agt.  Royal  Bank  of  Canada 

G.  O.  "Waterman Treas.  C.  R.  R.  of  N.  J. 

Samuel  Weil  Samuel  Weil  CSk  Son 

Frank  D.  \Vilsey  .  .  .  Pres.  New  York  Boat  Oar  Co. 
■Wm.  H.  "Woodin     Asst.  to  Pres.  Amer.  Car  and  Fdy.  Co. 


MEMBER   NEW   YORK   CLEARING   HOUSE   ASSOCIATION 


XXXIV 


Merchants    National 

Banky    Burlington,   Iowa 

Capital,      -        -       $100,000.00 
Surplus  and  Profits,    140,000.00 


Officers 

J.  L.  Edwards 

•               • 

^           ^         President 

W.  E.  Blake 

•               •               « 

Vice-President 

James  Moir 

,               , 

Vice-President 

Alex.  Moir 

,               , 

Vice-President 

H.  J.  Hungerforc 

. 

Cashier 

F.  L.  Houke 

,       , 

Ass't  Cashier 

C.  L.  Fulton 

• 

Ass't  Cashier 

Directors 

W.  E.  Blake,  Chairman 

H.  A.  Brown  W.  W.  Copeland 

James  Moir  Alex.  Moir 

W.  C.  Tubbs  N.  S.  Young 

T.  W.  Barhydt  J.  L.  Edwards 


XXXV 


flgSWD  \MyMf ' 


AN  Institution  where  Courtesy  and 
L  Care  in  the  smallest  affairs  have 
gone  hand  in  hand  with  Success  in 
the  most  important. 
One  which  will  appreciate  an  oppor- 
tunity to  serve  or  to  advise  in  any 
financial  or  fiduciary  matter  and  which 
is  especially  equipped  to  act  as  your 
agent  in  St.  Louis  and  the  Southwest. 

Capital,  Surplus  and  Profits 
$8,500,000.00 


XXXVI 


The  Chase  National  Bank 

of  the  City  of  New  York 
UNITED  STATES  DEPOSITORY 


(Clearing  House  Building) 

Capital      -         -         -  $     5,000,000 

Surplus  and  Profits  (Earned)  9, 1 00,9 1 3 

Deposits   -        -        -  128,700,251 

A.  BARTON    HEPBURN,    chairman 

o 

ALBERT   H.  WIGGIN,  PRCaiOKNT 
SAMUEL   H.  MILLER,  vice  prcsiocnt 
HENRY    M.  CONKEV,  CASHIER  EDWIN    A.  LE  E,  ASST.  cashi  CR 

CHARLES  C.  S  LADE,  ASST.  cashier       WILLIAM  E.  PU  RDV,  as  ST.  CASHII 
ALFRED    C.    ANDREWS,  ASST.  CASHIER 

DIRECTORS  


HENRY    W.CANNON  JOHN    I.WATERBURY 

JAMES    J.   HILL  U  GEORGE    F.  BAKER 

GRANT    B.  SCHLEY  ^  ALBERT    H.  WIGGIN 

A.BARTON    HEPBURN  GEORGE    F.BAKER,  JR. 

FRANCIS    L.   MINE 


We  receive  accounts  of   Banks,  Bankers,  Corporations,  Firms 

and  Individuals  on  favorable  terms,  and  shall  be  pleased  to 

meet   or   correspx)nd    with    those    who    contemplate 

making     changes    or     opening    new    accounts 

Foreign  Exchange  Department 


XXXVIl 


ORGANIZED  1838  NATIONALIZED  1865 

The  American  Exchange 
National   6ank 

New  York 


Capital  /^^^^^'^    Surplus  and  Profits 

$5,000,000      li^^l      $4,327,000 


LEWIS  L.  CLARKE,  President 

EDWARD  BURNS,  Vice-President    WALTER  H.  BENNETT, 

A.  K.  de  GUISCARD,  Asst.  Cashier  Vice-President  and  Cashier 

E.  A.  BENNETT,  Asst.  Cashier  ARTHUR  P.  LEE,  Asst.  Cashier 

GEORGE  C.  HAIGH,  Asst.  Cashier 


When  you  are  forming  a  banking  connection, 
we  ask  your  consideration  of  our  74  years' 
reputation,  experience  and  ability  to  render  you 
personal    and   special   service   in  all  departments. 


Depositary  of  the  United  States,  State  of  New  York  and 

City  of  New  York 


XXXVIII 


Detroit  the  Convention  City,  1912 


HOTEL  POIVTCHARTR AIN 

HEADQUARTERS: 

American  Bankers'  Association  Convention,  1912 

ABSOLUTELY  FIREPROOF 

GEORGE  H.  WOOLLEY  and  W.  J.  CHITTENDEX,  Jr.,  Ma?«IA.GERS 


XXXIX 


DETROIT    SKY    LINE. 

DETROIT  is  one  of  the  most  ideal  convention  cities  in  the  United  States,  owing  to  its  many  natural 
attractions,  its  many  excellent  hotels,  and  its  hospitable  people. 
It  is  a  city  of  varied  industries,  having  a  greater  variety  and  a  larger  number  of  manufacturing 
establishments  than  any  city  of  its  size  in  this  country.  Sixty  per  cent,  of  all  the  automobiles  manufactured 
in  the  United  States  are  made  in  Detroit.  Ninety-five  per  cent,  of  all  the  adding  machines  made  in  this 
country  are  made  in  Detroit,  it  being  the  home  of  the  Burroughs  Adding  Machine.  And  it  is  also  in  the  lead 
in  a  number  of  other  important  manufactories. 


DETROIT'S    L- 


XL 


tw.Nl    WINDSOR,    CANADA 

DETROIT'S  BANKING  INTERESTS 

Detroit  has  eighteen  incorporated  banking  institutions.  Three  National  banks,  five  State  banks,  three  Trust 
companies  and  seven  Savings  banks,  with  a  total  capital  and  surplus  of  $22,000,000,  total  deposits  of  about 
$160,000,000  and  total  resources  of  about  $188,000,000. 

There  are  521  incorporated  banks  in  Michigan,  but  Detroit  has  one  third  of  all  the  capital,  one  third  of 
all  the  savings  deposits  and  nearly  two  thirds  of  the  total  deposits  in  the  State.  Detroit  is  a  reserve  city.  Its 
total  clearings  for  191 1  were  $968,647,059. 


■f  rain,  Convention  Headquarters 
tjS    DISTRICT 


XLI 


Ss 


■■'..••!:ll'i!?«"S»:eSM-"5'. 


/:V -.^c.^f  \  fii^  *"^  Ri?  rp* 

i  2n  nn  5|  ^^ 

iiii^'!:  llliP*«!!iiiin 


:ir,ll^^^' 


4«  ¥i  RST  National  Bank 


OF   I>KTROIT* 


XLII 


T^-E  FIRST  Katio:xal.  Bank 


OF  DETROIT. 

ESTABLISHED    1863 


Capital  and   Surplus,  Tkree    Million   Dollars 

FIFTY   YEARS   of  PROGRESS 

Tke  First  National  Bank  of  Detroit 
establiskeJ  m  1863,  was  tke  ninety- 
seventk  kank  organizea  in  our  national 
kanking  system.  It  ^^^ill  m  1913  mark  its 
Fiftietk  Anniversary  of  continuea  success. 
Its  development  kas  keen  markea  ky  a  strict 
aJkerence  to  metkoJs  of  conservatism  yet 
progression.  Tkat  it  kas  kuildea  ^vell  is 
evidenced  ky  tke  strengtk  of  its  position  in 
tke  kanking  v^orld  and  its  far  reackmg  in- 
fluence m  tke  commercial  life  of  tkis  City 
and  State.  ^A^  itk  its  unexcelled  facilities, 
it  invites  tke  accounts  of  kanks,  corporations 
and  individuals  extending  to  eack  every 
courtesy  and  consideration. 


EMORY  W.  CLARK.,  President. 
WILLIAM  J.  GRAY,  Vice  President.  WALTER  G.  NICHOLSON,  Cashier. 

MERLE  B.  MOON,  Vice  President.  W.  A.  McWHINNEY,  Assistant  Cashier. 

FRANK  G.  SMITH,  Vice  President.  JOSEPH   GRINDLEY,  Assistant  Cashier. 

JOHN  W.  STALEY,  Vice  President.  F.  F.  CHRISTIE,  Assistant  Cashier. 

JOHN  H.  HART,  Manager  of  Credits. 

L.  F.  MERZ,  Manager  Foreign  Exchange  Department. 

IRVING  H.  BAKER,  Auditor. 


XLIII 


PENINSULAR  STATE  BANK 


of  DETROIT,  MICHIGAN 


Capital  ....  $800,000 
Surplus  Fund .  .  .  $300,000 
Deposits  .  .  .  $10,500,000 
Total  Resources   .      $11,600,000 


OFFICERS 

J.   H.  JOHNSON 

PRESIDENT 

FRANK   P.  BYRNE 

VICE-PRESIDENT 

FRANK  W.  HUBBARD 

VICE-PRESIDENT 

W.  G.  TOEPEL 

CAJSHIER 

H.   H.  ELLERTON 

ASSISTANT    CASHIER 

H.  MOXON 

ASSISTANT   CASHIER 

F.   F.  FLEMING 

ASSISTANT   CASHIER 

W.  J.  NESBITT 

ASSISTANT   CASHIER 


MAIN  BANKING  ROOM.    OPENING  DAY. 


XLIV 


DIME   SAVINGS   BANK   BUILDING 


The   dime   SAVINGS   BANK 

DETROIT,   MICHIGAN 

CAPITAL,  $1,000,000  SURPLUS  AND  PROFITS,  $700,000 

RESOURCES,  $13,000,000 


■William  Livingstone,  President 
George  H.  Barbour,  Vice-President 
Joseph  L.  Hudson,  Vice-President 


OFFICERS 

Charles  A.  ^Varren,  Cashier 
F.  F.  Tillotson,  Asst.  Cashier 
L.  C.  Sherwood,  Asst.  Cashier 


David  S.  Carnegie,  Asst.  Cashier 
Charlton  E.  Partridge,  i4ss/.Cas/i/er 
George  T.  Breen,  Auditor 


XLV 


XLVI 


Win  ^eopto  ^tate  panfe 


DETROIT 


MICHIGAN 


Capital,  Surplus  and  Profits,  $3,500,000.00 
Deposits    ::     ::     ::     ::     ::     ::  37,000,000.00 

OFFICERS  DIRECTORS 

Geo.  H.  Russel President  Russell  A.  Alger                    Geo.  E.  Lawson 

Geo.  E.  Lawson Vice-President  George  H.  Barbour                H.  B.  Ledyard 

R.  S.  Mason Vice-President  w.  T.  Barbour                        P.  H.   McMillan 

F.  A.  ScHULTE Vice-President  ^    M.  Campbell                     R.  S.  Mason 

B.  S.  Colburn Vice-President  g    g    Colburn                          Fred.  T.  Moran 

Austin  E.  Wing Cashier  ,-.     a     t->                                      »*    t    »* 

^,     _    _                               *-.    L-      c     •        r»  C.  A.  Ducharme                      M.  T.  Murphy 

H     P.  BoRGMAN      .    .    .   Cashier  Savings  Department  •* 

R.  W.  Smvlie  ....    Manager  Credits  and  Audits  Jeremiah  Dwyer                       W.  Howie  Muir 

J.  R.   BoDDE Assistant  Cashier  ^ «ank  J.  Hecker                      Geo.  H.  Russel 

Charles  H.  Ayers Assistant  Cashier  Fred.  W.  Hodges                     Henry  Russel 

Enoch  Smith .    .     Assistant  Cashier  J.  C.  Hutchins                        Hugo  Scherer 

R.  T.  CuDMORE      .     .         ....     Assistant  Cashier  Jas.  T.  Keena                           F.  A.  Schulte 

Geo.  T.  Courtney Auditor  Angus  Smith 


.v,.^a 


Accounts  of  Banks,  Bankers,   Firms,   Corporations 
and   Individuals   received.     .*.     Excellent   Collection 

Facilities 


XLVII 


Union  Trust  Company  lliiilding 

UNION   TRUST  COMPANY 

DETROIT,    MICH. 

Capital  1 1,000,000.      Surplus  and  Undivided  Profits  $500,000. 

OFFICERS 
HENRY  B.  LEDYARD,  Chairman  FRANK  W.  BLAIR,   President 

GEORGE  HENDRIE,  Vice-President  A.  E.  F.  WHITE,  Vice-President 

GERALD  J.  McMECHAN;  Vice-Pres.  and  Sec.  CHARLES   R.    DUNN,  Vice-President  and  Treasurer. 


XLVIII 


The  National  Park  Bank 
of  new  york 


organized   1856 


CAPITAL  AND  SURPLUS,    $  18,000,000 
DEPOSITS,  JUNE  14,  1912,  S111, 590,033 


GILBERT  G.  THORNE 

VICE-PRESIDENT 


WILLIAM    O.   JONES 

ASST.    CASHIER 


RICHARD    DELAFIELD 

PRESIDENT 


JOHN    C.    McKEON 

VICE-PRESIDENT 


MAURICE    H.    EWER 

CASHIER 


WILLIAM   A.    MAIN 

ASST.    CASHIER 


JOHN    C.   VAN    CLEAF 

VICE-PRESIDENT 


FRED'K  O.  FOXCROFT 

ASST.    CASHIER 


LOUIS    F.    SAILER 

ASST.    CASHIER 


GEORGE    H.    KRETZ 

MANAGER    FOREIGN     DEPT. 


DIRECTORS 


JOSEPH   T.    MOORE 
STUYVESANT    FISH 
CHARLES    SCRIBNER 
EDWARD   C.    HOYT 
W.    ROCKHILL    POTTS 
AUGUST    BELMONT 
RICHARD    DELAFIELD 
FRANCIS    R.    APPLETON 


CORNELIUS   VANDERBILT 
ISAAC   GUGGENHEIM 
GILBERT   G.    THORNE 
JOHN    C.    McKEON 
RICHARD    H.    WILLIAMS 
THOMAS    F.    VIETOR 
EDWARD   C.   WALLACE 
EDWIN    G.    MERRILL 


JOHN    G.    MILBURN 


Directors : 

HOKACE    E.    AirSBBWS 

I'res.   New  York  State  Eys. 

AVQUST .  BEIiMONT 

August   Bo.!uiunt  &  Co. 

AUGUST  BEIiMOZTT,  JB., 

August  BiJmont  &  Co. 
DANIEI^     J.    CABBOZil^ 
I'lesUlollt    Albcrene   Stone   Co. 
HABDEir  Xi.  CBAWFOBD 


Capital  and  Surplus 
$3,000,000 


THE 


Pres 


The 
Ne 
F.  S. 


iitu 
York. 


lin 


DU  POHT 

Tfeas.     E.     1.     l>u     Pont    de 
Nemours   Powder  Co. 

SESMOND  DuirnrE 

Pros.  Dcsraond  Duudg  Co. 

EI^I^IS    F.    EAB£E 

I'resident   NIpissinB  Mines  Co. 

O.    O.    FESSENDEN 

Ilayden    W.    Wheeler   &   Co. 

EI^BEBT   H.   QABT 

Chairman   of   the   Board 

U.  S.  Steel  Corporation. 

H.   STUABT  SOTCHKISS 

VIce-Pres.   &  Treas. 

L.    Candee   Rubber   Co. 

JOEir  M.  KAirSEN 

Pres.   Standard   Steel   Car  Co. 

FABME^T   W.   HEBBZCK 

Cleveland,    Ohio. 

OEOBOE   M.   KABD 

Chairman  of  the  Board. 

FBAVK    J.    SCEAITET 

Everett.    Hcane.v   &   Co. 

AUaUST    KECXSCKEB 

VIce-Pres.   Eastern  Steel  Co, 

BicaABD  K.  HiaamB 

^'ice-President. 


3aNIC 


Directors : 

FBAKXI^IN    S.   JEBOME 

I'Tes.    First    Nafl   Bunli, 


wii.i;iAM  A.  i;aw 

Vice-Pn-s.     First    Nafl    Bank 
of   Phiia.,    Pa. 

FBAKK    B.   IiAVTBENCE 

Counsullor-at-Law. 


JOHN   BUTQI^IITO 

Ulngling   Bros. 

EDWABD      SHEABSOSr 

Shearson.    Hamniill  &   Co. 

KENBT   F.   SHOEMAXEB 

Now    York    City. 


New  York 


JOHir    D.    VEBMEU^E 

Prvs.   Uofidyear  Rubber  Co. 

samue:l  wezXi 

Siimuel    Weil    &   Son. 
FBANK    S.    UriTKEBBEB 

Pres.   WItherbee,  Sherman  &  Co. 
JOSEFS    B.    WBIOHT 

Pres    U.    S.    Finishing  Co 

I.OUIS    a.   XAUFUAir,    President. 
FBANX   J.   HEAJTET,   Vice-President.  BICHABB   H.   HIQanrs,    Vice-President 

WIIiIiIAM  H.   STBAWK,  Vice-President.      AIiFBED   II.   BUI^I^,  Vice-President. 

BEBT    i;.    HASKIBTS,    Cashier. 

HENBT  Ii.  CADUUS,   Assistant   Cashier.    NOBBOBKE  F.  OATIiINO,  Asst.  Cashier. 

WAXTEB   B.   BOICE,   Assistant    Cashier.    HEKBV   C.  HOOIiET,   Assistant   Cashier. 

OEOBOE    M.    HABD,    Chairman. 

We  invite  the  Accounts  of  Banks,  Bankers,  Manufacturers,  Mercliants  and  Individuals. 


,_.F#Vs)_ 


ESTABLISHED  1832 


fi^Hl'I^UL 


NASSAU, 

BANKf 

aFNEWVDRK' 


XATIOXALIZED   1911 


•- <3(|^- 


CHARTER   MEMBER   NEW    YORK    CLEARING    HOUSE 


OFFICERS 

EDWARD      EARL, 
JOH  N      MU  N  RO 

VICE-PRESIDENT 

LAURENCE     H.     HENDRICKS 

VICE-PRESIDENT 


H.    P. 


PRESIDENT 

HENRY     C.     MILLER 

VICE-PRESIDENT 

NEWTON      D.     ALLING 

VICE-PRESIDENT 

ARTHUR     W.     GILBART,     cashier 

STURR,    ASS'T    CASHIER 


G.    L.  THOMAS,  ass-t  cashier 


D  1  R 

E  C  T  O 

R  S 

SAMUEL     R.     WEED 

F.     MUNROE     DYER 

JOHN      MU  N  RO 

ARTHUR     COPPELL 

HENRY     C.     MILLER 

J.     CHRISTY     BELL 

AUGUSTINE     J.     SMITH 

D.     HUNTER      McALPIN 

LAURENCE      H.     HENDRICKS 

ARTHUR     C.     HARRIS 

EDWARD 

EARL 

THE    FOURTH 
NATIONAL    BANK 

OF    THE    CITY    OF    NEW    YORK 

This  bank  was  founded  in  1864  by  a  group  of  leading 
New  York  citizens  with  the  object  of  serving  the 
monetary  and  commercial  interests  of  New  York  and 
the  country  at  large. 

Throughout  its  history,  a  policy  of  safe,  steady  growth, 
and  association  with  some  of  the  most  eminent  and 
responsible  factors  in  American  financial  and  com- 
mercial life  has  been  consistently  maintained  with 
resultant    success    and    satisfaction    to    its    customers. 


JAMES  G.  CANNON,   president 
SAMUEL  S.  CAMPBELL  DAN  lEL  J.   ROGERS 

VICE-PRESIDENT 

CHAS.   H.   PATTERSON  CHARLES  E.   FOX 

VICE-PRESIDENT  ASS" 

ERNEST  W.   DAVENPORT  EDWIN  T.   ROSS 

VICE-PRESIDENT  ASS" 

CHARLES  E.   MEEK 

VICE-PRESIDENT 


CASHIER 


ASS-T     CASHIER 

RAYMOND  B.  COX 

ASS'T     CASHIER 


CAPITAL    AND     SURPLUS,    $10,000,000 


XLIX 


The  Citizens  Central  National  Bank 

of  new  york 


THE  location  of  a  banking  institu- 
tion in  New  York  City  often 
indicates  tire  character  of  its 
business;  a  bank  situated  in  the 
very  heart  of  the  great  wholesale  tex- 
tile district,  and  controlling  a  large 
percentage  of  that  class  of  trade,  is 
naturally  in  a  position  to  extend  out- 
of-town  clients  unusual  advantages. 


The  Citizens  Central  National  Bank 

is  located  on  Broadway  at  Pearl  and  Worth  Streets; 
within  a  radius  of  a  few  blocks  will  be  found  a  number 
of  the  leading  textile  houses  of  the  world,  besides 
hundreds  of  firms  in  other  branches  of  trade,  from 
which  this  bank  receives  its  patronage.  The  commer- 
cial character  of  its  customers  gives  it  a  larger  volume 
of  mercantile  collection  items  on  other  cities  and 
towns  than  is  handled  by  any  other  bank  of  its  size 
in  New  York.  This  class  of  business  makes  it 
profitable  for  banks  throughout  the  country  to  carry 
accounts  with  the  Citizens  Central. 


Capital 

^2,550,000 

Surplus  and 

Profits 

2,000,000 

Total  Resources    . 

34,400,000 

EDWIN  s 

SCHENCK. 

President 

FRANCIS  M.  BACON,  Jr. 

- 

Vice 

-President 

ALBION  K.  chapman    - 

. 

-     ■ 

Cashier 

JELSSE  M.  SMITH 

. 

-      ) 

JAMES  McAllister 

- 

>•   Asst 

Cashiers 

WILLIAM  M.  HAINES 

. 

-      ) 

TABLE  OF  CONTENTS 

Page 

FOREWORD            --.---..  I 

MONETARY  SYSTEMS         - 3 

COMPARISONS  OF  SYSTEMS    -----  7 

THE  SYSTEM  OF  THE  UNITED  STATES       -         -  9 

ANTE-BELLUM  BANKS       ---.-.  13 

PRESENT  SYSTEM  AND  PROPOSED  REFORM      -  18 

CHARTER    OF    THE    BANK    OF    THE    UNITED 

STATES,    1816 21 

FOREIGN  SYSTEMS: 

w/^tREAT  BRITAIN           ---...  29 

France       - ^^ 

/GERMANY 39 

AUSTRIA-HUNGARY 41 

RUSSIA 45 

ITALY     -         -         - 47 

SWITZERLAND -  48 

SWEDEN 49 

BELGIUM       ----....  51 

JAPAN 53 

n/CANADA         -         -         - ^4 

MEXICO          -         -         -         -         -         -         -         -  56 

,        COMPARATIVE  STATEMENTS     -         -         -         -  57 

SUMMARY      -         -         -         -                  .         .         -  5g 


Capital  $  1,000,000       Surplus  $2,000,000      Profits  $707,315.70 


The 

Liberty  National 
Bank 

of  New  York 

139  Broadway,  near  Liberty  Street 

The  high  standing  of  the  men  composing  the 
Board  of  Directors  of  this  Bank  is  a  guaran- 
tee of  its  strength  and  ability  to  respond  to 
every  reasonable  demand  that  can  be  made 
upon  it. 


DIRECTORS 


Union  N.  Bethell 

Vice-Pres.  American  Tel.  and  Tel.  Co. 
Newcomb  Carlton 

Vice-Pres.  Western  Union  Tel.  Co. 
George  B.  Case 

White  &  Case 

Edmund  C.  Converse 

President  Bankers  Trust  Co. 

Otis  H.  Cutler 

Pres.  American  Brake  Shoe  and  F'dry  Co. 

Henry  P.  Davison 

J.  P.  Morgan  &  Co. 
Zoheth  S.  Freeman 

Vice-President 

Samuel  L.  Fuller 

Kissel,  Kinnicutt  &  Co. 

Thomas  A.  Gillespie 

President  The  T.  A.  Gillespie  Co. 

Francis  L.  Hine 

Pres.  First  National  Bank,  New  York 

Edward  E.  Loom  is 

Vice-Pres.  Del.  Lack,  and  West.  R.  R.  Co. 

Arthur  F.  Luke 

Luke,  Banks  &  Weeks 


Howard  W.  Maxwell 

Vice-Pres.  Atlas  Portland  Cen-.ent  Co. 
Ambrose  Monell 

President  International  Nickel  Co. 
Daniel  E.  Pomeroy 

Vice-Pres.  Bankers  Trust  Co. 
Seward  Prosser 

President 

Daniel  G.  Reid 

Chair.  Board  Direc,  Rock  Island  System 
Charles  W.  Riecks 

Vice-President  and  Cashier 

Charles  H.  Sabin 

y ice- President  Guaranty  Trust  Co. 

Frederick  B.  Schenck 

Chairman  Board  of  Directors 

Charles  H.  Stout 

New  York 

Henry  C.  Tinker 

New  York 

Charles  H.  Warren 

Treasurer  Mutual  Life  Insurance  Co. 

Albert  H,  Wiggin 

President  Chase  National  Bank 


Mercantile  Accounts  Invited 


i.n 


FOREWORD 


DDDDaa 
a  a 

D        I        D 

D     A     n 

D  D 

DDDaaa 


HE  people  of  the  United  States  today  have  before  them  the 
gravest  problems  which  have  arisen  in  a  generation.  Of 
these  the  money  and  banking  question  is  regarded  by  many 
of  our  most  thoughtful  men  as  the  paramount  one.  A  plan 
for  the  solution  of  this  problem  has  been  presented  by  the  National 
Monetary  Commission,  and  is  now  before  Congress  and  the  people  for 
discussion. 

Qlt  is  imperative  that  this  problem  be  solved  correctly,  because  it 
involves  the  welfare  of  every  citizen,  since  every  citizen  uses  money  and 
most  of  them  use  banks  of  one  kind  or  another, 

QOur  money  and  banking  system  contains  so  many  defects  that  it  can- 
not perform  the  functions  properly,  and  the  result  is  that  we  have 
periodic  disturbances  that  destroy  values  and  bring  distress  to  the 
mass  of  our  people.  Other  people  are  not  subject  to  the  same  condi- 
tions because  they  have  money  and  banking  systems  which  operate 
properly  and  serve  all  interests. 

Q  It  is  obviously  up  to  the  bankers  to  see  to  it  that  the  representatives 
of  the  people  in  Congress  are  guided  to  a  correct  solution  of  the  problem; 
the  bankers  are  supposed  to  know  what  is  necessary. 

QAs  a  contribution  to  the  study  of  the  subject,  the  BANKING  LAW 
JOURNAL  has  undertaken  to  present  a  concise  account  of  the  money 
systems  of  the  principal  civilized  countries,  in  order  that  those  who  wish 
to  learn  how  other  people  have  solved  the  same  or  similar  problems, 
may  do  so.  A  comparison  of  the  means  thus  employed,  and  of  the 
resulting  experience,  will  unquestionably  be  useful  in  reaching  a  conclu- 
sion as  to  our  o^vn  needs. 

Q,  It  is  proposed  in  this  volume  to  show  what  we  have  had  in  the  past, 
in  the  way  of  a  monetary  system,  what  we  now  have,  and  v^hat  is 
proposed  for  the  future;  discussing  the  proposed  plans  in  the  light  of 
the  past  experience  both  here  and  abroad. 

Q  Believing  that  the  service  thus  tendered  to  bankers  and  others  who 
want  to  know  how  to  meet  our  problem  intelligently,  will  be  appre- 
ciated, the  publishers  of  the  JOURNAL  submit  this  volume,  confident 
that  it  will  serve  a  useful  purpose  in  the  consideration  of  the  subject. 


WHERE  MONEY   IS  MADE  AND  WHERE  IT  IS  DESTROYED  IN  THE  BANK  OF  FRANCE 

I.  WHERE  THE  NOTES  ARE  PRINTED.     2.  CANCELING  MACHINES. 
3.  WHERE  THE  NOTES  ARE  DESTROYED. 


MONETARY      SYSTEMS 


DODDDD 
□  D 

D       *        D 
D      A       D 

D  -^  ^    n 

D  D 

DDnDDD 


COMPREHENSIVE  study  of  Monetary  Systems  must  include  considera- 
tion of  all  the  means  of  payment  employed ;  hence  not  only  coin  and 
paper-currency,  but  also  checks — or  more  specifically  deposit-currency — 
must  receive  attention. 

Coins 

Excluding  the  subsidiary  and  minor  coins  from  present  consideration,  the  coin 
systems  of  the  world  fall  within  one  of  the  following  classes  : 

1.  Gold  Standard. 

2.  Silver  Standard. 

3.  Gold  and  Silver  Standard,  but  without  coinage  of  silver. 

4.  Gold  Standard  with  Silver  Currency. 

Standard  coins  are  those  which  are  by  law  made  legal  tender  in  payment  of  debts 
without  limitation  of  the  amount. 

Of  class  one  the  chief  examples  are  Great  Britain  and  Germany,  where  gold 
alone  is  standard  money. 

Of  the  second  class  China  is  the  only  important  example;  there  gold  is  only 
merchandise. 

In  the  third  class  are  included  the  United  States  and  France;  both  gold  and 
silver  coins  are  accepted  as  standard  money. 

In  the  fourth  class  Mexico  and  British  India  rank  first;  gold  is  the  nominal 
standard  but  silver  is  the  actual  money,  at  fixed  value  to  gold. 

In  considering  coinage  the  ratio  between  gold  and  silver  was  formerly  an  impor- 
tant point;  it  cuts  no  figure  today,  since  standard  silver  coinage  is  not  important. 

The  fineness  of  gold  coins  as  well  as  their  weight,  are  essential  features  in 
determining  value,  because  the  grain  (or  gramme)  of  pure  gold  is  the  ultimate 
measure  thereof,  at  an  equivalent  rating  throughout  the  world. 


TEEE  HIMEi^SelT 


////^.. .      _  y^/f//:/ ^7^/ /////_  ^r^iv-  '  '  /^-  * 


c.*"  '^  «.  ■^^cx-Z^x-  - 


EUaHHlUNIIlM 


HKHBHB-.iaBi 


/^. 


i>.^feii^^i;mn".i:ri»'ii.iiiiiir '>Bi<>wy»^T<#.i»iiib>j<iftiiaifljiwJ>  ■■  lianawiMrg 


NOTES  OF  THE  SECOND  BANK  OF  THE  UNITED  STATES 

I.  NOTE  OF  THE  PARENT  BANK,  PHILADELPHIA.   2.  NOTE  OF  THE  NASHVILLE  BRANCH. 

3.  NOTE  OF  THE  NEW  ORLEANS  BRANCH. 


THE     WORLD'S     PRINCIPAL     MONETARY     SYSTEMS 

Paper  Currency 

Generally  speaking  the  paper  money  of  the  world  may  be  divided  into  three 
classes : 

1.  Bank  Notes. 

2.  Government  Notes. 

3.  Certificates  of  deposit  for  coin. 

The  fundamental  reason  for  note-issues  is  the  need  for  supplementing  the  coin 
supply;  when  this  purpose  is  adhered  to,  the  use  of  notes  is  highly  beneficial;  when 
it  is  not  observed  within  proper  limitations,  evil  results  usually  follow. 

The  United  States  has  all  three  forms;  most  countries  have  only  the  first. 
Bank  notes  are  in  most  countries  secured  by  reserves  in  coin,  by  law  or  practice. 
Government  notes  are  not  always  amply  protected  by  coin.  Coin  certificates  are 
always  fully  covered. 

Government  notes  are  usually  given  full  legal-tender  power;  bank  notes  possess 
that  power  in  a  few  countries. 

Deposit  Currency 

In  this  category  savings  banks'  deposits  are  not  included;  only  such  deposits  as 
are  subject  to  check  must  be  considered. 

Legal  provisions  calling  for  reserves  against  deposits  exist  in  the  United  States, 
Belgium,  Austria-Hungary,  and  a  few  other  countries. 

In  the  other  leading  countries  the  practice  is  to  hold  reserves  that  are  deemed 
adequate  for  protection. 

The  need  for  such  safeguards  is  evident,  since  the  confidence  of  depositors  must 
be  assured,  to  give  the  checks  against  deposits  currency  or  debt-paying  functions. 

Reserve  Requirements 

Where  reserve  provisions  exist,  either  pursuant  to  law  or  practice,  and  are  con- 
sistently observed,  the  stability  of  the  currency  resting  thereon  is  in  large  measure 
assured.  Nevertheless  conditions  bearing  upon  this  feature  of  monetary  systems 
vary  in  different  countries  ;  and  different  methods  are  employed  to  bring  about 
such  stability. 

Stability  is  impossible  where  inflation  is  not  adequately  curbed,  and  undue 
contraction  is  not  properly  prevented.  The  end  to  be  attained  is  obviously  to 
adjust  the  volume  of  supply  of  both  paper  currency  and  deposit  currency  to  the 
demand.  The  rates  for  money  here  play  an  important  role,  and  the  less  these 
fluctuate  the  better  will  business  interests  be  served. 


'^  ^'    ■■'    --    ^7    O    C\-  -,  '      ,     1 


■  %■ 


Lj-'^j  -^  ^     u.^-^     rc-r*   Ns.v     v^  ^ 


-..■vl';  /,- 


^^.f  FOUR  ^  C  ^  -^  %!  t^  #f  :=;' 


:X<i5x  :^<  «»-»^3"<0*>0'"ii> 


m.y,.^  /  J'J  /  J        i  .  •      ••  -     .  >, 


■%^k%>,l^ji^^_^fc- 


CONTINENTAL  CURRENCY  1776 

FACSIMILES  OF  CIRCULATING  NOTES  OF  THE  CONTINENTAL  CONGRESS.     NOTE  THE   SKELETON  OF  LEAVES 

ON  THE  BACK  TO  PREVENT  COUNTERFEITING 


Comparisons  of  Monetary  Systems 


Fundamental  Conditions  to 
BE  Considered 


DanDoa 

D  D 

D       T       D 
D        I        D 

D       A       D 
D  D 

DDDDDD 


N  making  comparisons  of  the  means 
employed  by  the  nations  of  the 
world  in  the  regulation  of  their 
monetary  affairs,  we  must  bear  in 
mind  those  differences  in  funda- 
mental conditions  which  make  the  problem 
of  reform  in  the  United  States  one  that 
differs  essentially  from  those  now  or  formerly 
obtaining  abroad. 

First  and  foremost,  the  United  States  is  a 
federated  republic,  in  which  48  states  are 
possessed  of  co-ordinate  power  in  the  field 
of  banking  legislation;  hence  there  has  grown 
up  a  system  of  numerous  small  independent 
banks,  the  like  of  which  exists  in  no  other 
country  except  Japan. 

In  almost  every  other  important  country 
branch  banking  prevails,  and  the  people  of 
every  locality  are  thus  well  served,  and  pro- 
bably much  more  economically  than  our 
individual  bank  system  serves  us. 

It  thus  happens  that  in  most  countries  a 
strong  central  bank  with  branches  dominates 
the  system;  that  other  banks  are  usually 
largely  capitalized  and  also  operate  through 
branches.  Notable  exceptions  to  this  rule 
are  Canada  and  Mexico,  but  solely  in  the 
particular  that  no  one  bank  is  legally  con- 
stituted the  dominant  one;  a  number  of  banks 
with  equal  powers  under  the  laws,  make  up 
the  systems,  although  in  each  case  one  has 
become  the  leader  because  of  preponderance. 

It  is  further  to  be  borne  in  mind  that  no 
country  except  Russia  has  anything  like  the 
area  and  population,  and  the  diversified  inter- 
ests, that  are  found  in  the  United  States ;  and 
in  the  case  of  Russia  this  condition  is  not 
significant. 

It  is  manifest  that  needs  are  as  diverse  as  the 
conditions;  vast  regions  still  to  be  developed  re- 
quire a  different  kind  of  service  from  that  which 
is  called  for  in  the  settled  and  developed  ones; 
agriculture's  needs  are  not  the  same  as  those 
of  industrial  and  commercial  interests. 

It  is  further  to  be  considered  that  within 
the  United  States  the  practice  of  fixed  reserves 
for  banks  is  almost  universally  applied;  this 
exerts  a  powerful  influence  upon  conditions. 
In  other  countries  the  practice  varies,  but  it 
is  nowhere  as  rigid  and  as  universally  enforced 
as  our  laws  contemplate. 

An  important  result  of  the  conditions 
adverted    to    is    that    in    the    United    States 


interest  or  discount  rates  vary  quite  exten- 
sively, the  variation  being  properly  char- 
acterized as  geographic  and  seasonal. 

Another  circumstance  is  that  in  the  nature 
of  things  our  multitude  of  banks  (27,000) 
are  in  very  large  part  conducted  by  men  who 
are  not  by  training  or  experience  fully  equal 
to  the  requirements  of  the  business  in  the 
broader  sense;  in  other  countries  where  banks 
are  few,  the  management  is  in  the  hands  of 
men  specially  trained  to  the  duties. 

In  the  development  of  our  system,  such 
as  it  is,  there  has  been  a  decided  leaning 
toward  preference  to  stock-market  transac- 
tions, whereas  in  other  countries  commercial 
needs  are  given  marked  advantage.  We  have 
no  organized  market  for  commercial  paper. 

Finally  we  have  as  a  handicap,  conditions 
created  by  unwise  legislation,  both  national 
and  state,  producing  confusion  and  erratic 
results.  Our  paper  currency  is  hence  lacking 
in  the  chief  essential  to  soundness,  viz.: 
elasticity  of  volume;  and  our  credit  currency, 
represented  by  deposits  in  banks,  is  so  inade- 
quately regulated  that  proper  adjustment  to 
needs  and  conditions  is  impossible. 

We  have  thus,  at  times,  inflation  far  beyond 
reason;  whereas  in  other  countries  the  adjust- 
ment of  supply  to  demand  is  so  much  more 
nearly  achieved,  that  there  is  brought  about 
a  stability  of  enormous  service  to  trade. 

It  may  hence  be  said  that  soundness  and 
stability  are  the  chief  objects  to  be  attained; 
all  other  factors  are  simply  contributory 
thereto.  Erratic  instability  is  the  concen- 
trated result  of  the  co-operation  of  all  the 
defects  of  our  system;  unsoundness  is  a 
necessary  sequence.  The  correction  thereof 
should  hence  be  our  aim  in  devising  measures 
for  the  regeneration  of  the  system.  No 
plan  which  ignores  this  is  worthy  of  atten- 
tion. 

It  is  to  be  added  that  since  deposit-banking 
is  not  extensive  in  any  of  the  leading  foreign 
countries  excepting  Great  Britain,  Canada 
and  Australasia,  the  problems  which  arose 
there  related  chiefly  to  currency  issues,  and 
the  banking  laws  in  those  countries  today  deal 
particularly  with  that  phase  of  the  question. 

In  general  it  is  essential  to  recognize  the 
close  correlation  of  the  note-issuing  and 
deposit-carrying  functions,  giving  due  weight 
to  differentiations  due  to  local  conditions. 

The  foregoing  comments  furnish  a  basis 
for  intelligent  consideration  of  our  problem 
and  of  the  means  proposed  for  its  solution. 


THE  UNITED  STATES  MINT,  PHILADELPHIA 


UNITED  STATES  TREASURY,  WASHINGTON 


The  System  of  the  United  States 


Coin 


DDDDDQ 
D  D 

n     I     D 

D       1       D 
D  D 

DDDDDD 


HE  coinage  system  of  the  United 
States  dates  from  the  law  of  1792 
which  established  bi-metallism  at 
the  ratio  of  1 5  to  i ;  both  gold  and 
silver  were  made  legal  tender.  For 
gold  the  British  standard  of  .916  2-3  was 
adopted;  for  silver  the  fineness  was  .892.4.  In 
1834  the  gold  coins  were  changed  in  weight. 
In  1837  the  silver  dollar  was  changed  in  weight 
to  4123/2  grains  and  the  ratio  to  gold  altered 
to  15.988  (or  nominally  16  to  i)  and  the 
fineness  of  coins  changed  to  .900.  The  change 
in  ratio  was  made  to  accord  with  the  rest  of 
the  world  which  had  adopted  higher  rates. 

An  act  of  1873  omitted  the  silver  dollar 
from  the  coinage  without  affecting  its  legal- 
tender  quahty.  In  1878  its  coinage  was 
reinstated  but  in  limited  amounts.  In  1890 
the  purchase  of  silver  for  coinage  was  in- 
creased, but  repeated  attempts  to  reach  some 
international  agreement  on  silver  having 
failed,  the  acquisition  of  silver  was  stopped 
in  1893.  The  bullion  has  been  coined  into 
dollars,  which  now  amount  to  $565,000,000. 

In  March  1900  an  act  was  passed  purport- 
ing to  estabUsh  the  gold  standard,  but  it 
merely  decreed  the  maintenance  of  parity 
between  gold  and  silver  and  the  silver  dollar 
remains  a  coin  with  full  legal-tender  powers. 

At  present  the  standard  is  the  theoretic 
gold  dollar  of  25.8  grains  .900  fine,  hence 
23.22  grains  of  pure  gold,  which  gives  a  value 
of  $20,672  to  the  ounce  of  pure  gold.  The 
silver  dollar  weighs  412.5  grains,  and  is  also 
.900  fine;  the  coinage  rate  for  silver  is  thus 
$1.2929  per  ounce  fine;  but  silver  is  worth 
only  50  to  60  cents  the  ounce  in  the  market. 

Subsidiary  silver  is  since  1853  coined  at  a 
rating  about  7%  below  that  of  the  standard 
silver  dollar,  and  is  legal  tender  to  $10  only. 

Paper  Currency 

During  the  Revolutionary  War  both  the 
United  States  and  the  states  (excepting  New 
Hampshire  and  Georgia)  issued  "continental 
currency,"  or  promises  to  pay,  without  any 
coin  behind  them  wherewith  to  redeem  the 
promises.  In  many  states  this  currency  was 
made  legal  tender,  and  to  refuse  it  in  payment 
was  in  some  instances  declared  treason  by 
law.  Nevertheless,  it  was  issued  so  freely 
that  it  depreciated  quickly  and  violently; 
in  all  there  was  printed  and  circulated  (omit- 


ting a  mass  of  counterfeits)  some  $280,000,000. 
Finally  its  value  fell  to  one  cent  on  the  dollar. 
It  was  unquestionably  the  worst  currency  the 
country  ever  had.  In  1790  Congress  passed 
an  act  offering  to  redeem  this  currency  at  the 
rate  mentioned  (one  per  cent,  of  its  face)  but 
it  is  not  known  how  much  was  redeemed. 

After  the  establishment  of  the  Government 
under  the  Constitution  (1789)  the  currency 
system  had  a  checkered  career.  Beginning 
with  notes  of  a  few  state  banks  prior  to  1791, 
the  United  States  provided  for  regulation  by 
creating  a  central  bank  in  that  year.  It 
served  the  purpose  well,  but  as  state  banks 
increased  the  regulative  system  chafed  them 
and  when  the  charter  of  the  United  States 
bank  came  to  an  end  in  181 1  renewal  was 
refused.  This  caused  inflation  of  currency, 
a  crisis  and  distress;  in  181 6  the  second 
United  States  Bank  was  chartered,  and  in  a 
few  years  it  had  the  currency  well  regulated. 

Again  this  proper  regulation  proved  irksome 
to  state  banks,  and  the  renewal  of  the  charter, 
expiring  in  1836,  was  refused ;  inflation  again  fol- 
lowed when  regulation  disappeared,  and  the 
crisis  of  1 83  7  was  the  result.  Political  exigencies 
defeated  the  carrying  out  of  the  people's  man- 
date in  1840  to  create  another  central  bank, 
and  for  more  than  20  years  state  banks  furnished 
all  the  paper  currency,  the  greater  part  of  which 
was  disgraceful,  being  depreciated  and  fluctuat- 
ing violently  in  value,  often  proving  absolutely 
worthless,  because  regulative  reserve  laws 
were,  in  general,  absent.  Periodic  inflation 
and  distressful  results  occurred.  , 

The  sub-treasury  system  under  which  the 
Government  held  its  own  revenues  and  kept 
its  cash  balances  locked  up,  depriving  the 
people  of  the  use  of  the  money,  was  created 
in  1840,  perfected  in  1846. 

In  the  Civil  War  period  the  United  States 
undertook  nationalization  of  the  currency; 
Government  legal-tender  notes  were  issued 
in  1862,  national  bank  notes  were  provided 
in  1863-64;  soon  state  bank  notes  disappeared 
entirely.  Having  no  reserve  behind  them 
the  Government  notes  depreciated,  fluctuating 
seriously;  the  bank  notes  being  redeemable 
in  the  "greenbacks"  also  depreciated.  But 
in  1879  resumption  of  specie  payments  and 
the  creation  of  a  $100,000,000  gold  reserve 
fund,  brought  them  to  par  with  gold. 

For  most  of  the  period  from  1836  to  1870 
most  of  the  currency  of  the  people  was  as 
unstable  as  water,  giving  no  assurance  of 
value  from  day  to  day. 


x^J-^'t'^      I     III  Jin 


■  jj   i  ^::.'-0  .S'»c  -^IK  -^ 

^/^--  .J\  —.  ~  2>.  ^  -  !,-  -'  ::>  ^^ 

"    ■  ;  l^  -r.  *7]  rj  -;  t^  ^-  -^  .;  <^ 


CONTINENTAL  CURRKNCV 


V 


NOTES  OF  THE  COLONY  OF  NEW  YORK  177' 


THE     WORLD'S     PRINCIPAL     MONETARY     SYSTEMS 


In  1864  the  sub-treasury  act  was  modified 
so  as  to  enable  the  deposit  of  the  Treasury 
balance  in  national  banks,  properly  secured, 
thus  making   the   money  available  to  trade. 

Under  an  act  of  1863,  repeated  in  1882 
and  in  1900,  gold  certificates,  and  in  1878 
silver  certificates,  were  provided  for.  In 
1890  a  new  form  of  Treasury  note  to  be 
issued  for  silver  purchases  was  authorized; 
about  $155,000,000  were  issued;  these  have 
since  been  almost  entirely  redeemed.  In 
1900  the  gold  reserve  against  greenbacks  was 
increased  to  $150,000,000. 

The .  national  bank  notes  are  based  upon 
Government  bonds;  no  reserve  is  held  against 
them;  yet  no  one  doubts  their  soundness. 
The  most  far-reaching  change  in  the  original 
law  was  that  which  authorized  small  banks 
with   minimum    capital  of   $25,000   in    1900. 

The  direct  money  means  hence  consist  of 
gold,  silver  dollars  and  greenbacks,  all  full 
legal  tender;  subsidiary  silver  of  limited 
tender;  gold  and  silver  certificates,  not  legal 
tender  but  available  for  payment  of  all 
Government  dues  and  for  bank  reserves; 
national  bank  notes,  not  legal  tender  but 
receivable  by  the  Government  for  internal, 
taxes  and  by  all  banks;  also  available  in 
many   of  the   states    for    reserves   of   banks. 

The  volume  of  silver  dollars  and  certificates 
and  of  greenbacks  is  now  fixed  by  law;  that 
of  national  bank  notes  is  determined  largely 
by  the  supply  of  bonds;  gold  (and  gold  cer- 
tificates) alone  may  be  increased  without 
legal  restrictions.  It  is  noteworthy  that  the 
legislation  of  1900  served  to  bring  us  gold 
so  t*hat  the  stock  in  the  country  increased 
(1897-1912)  by  $1,000,000,000.  Bank  notes 
also  increased  from  $291,000,000  to  about 
$700,000,000  under  the  influence  of  that  law. 

Deposit  Currency 

Prior  to  the  Civil  War  the  character  of 
banking  was  largely  currency-issuing;  in  more 
recent  years  deposit-banking  became  domi- 
nant. It  was  imagined  that  state  banks 
deprived  of  note-issue  powers  (1865)  could 
not  thrive;  hence  they  nearly  disappeared. 
After  1874  a  change  took  place  and  these 
banks  are  now  far  more  numerous  than  the 
nationals.  Still  later  trust  companies  as- 
sumed deposit-banking  functions;  and  the 
combined  business  of  these  two  classes  of 
state  institutions  is  today  greater  than  that 
of  the  national  banks. 

Since  the  reserve  regulation  of  deposit 
currency  is  an  essential  feature  for  safety  and 
stabiUty,  the   fact   that  the  vast  amount  of 


this  class  of  money-means  is  created  under 
48  different  codes  of  laws,  with  equally  variant 
reserve  systems,  absolutely  prevents  that 
uniformity  which  is  necessary  to  a  sound  and 
stable  currency. 

Inflation  is  the  periodic  result,  and  this 
inflation  of  credit  currency  has  been  the  main 
factor  in  producing  the  crises  from  which  the 
people  have  suffered  so  severely. 

Moreover  the  reserve  laws,  both  national 
and  state,  encourage  the  deposit  of  a  large 
part  of  the  prescribed  reserves  of  interior 
banks  in  the  banks  in  the  centers;  this  causes 
a  congestion  there,  and  incites  improper  stock 
speculation,  to  the  detriment  of  ordinary 
commercial  business.  Hence  when  needs 
arise  the  interior  banks  are  short  in  their 
means  and  the  pressure  for  cash  becomes 
acute.  Thus  come  our  periodic  panics,  when 
banks  simply  suspend  cash  payments,  of 
course  in  violation  of  law,  and  substitute 
artificial  currency  of  their  own,  (clearing- 
house certificates,  etc.). 

Discount  Rates 

The  discount  rates  in  the  United  States  must 
be  considered  from  two  view-points:  that 
for  "call  loans"  generally  secured  by  stock 
exchange  collateral  ranging  from  3^  per  cent, 
per  annum  to  3^  per  cent,  per  day,  or  182  per 
cent.;  and  that  for  commercial  loans  and  dis- 
counts, ranging  from  4  per  cent,  to  12  per  cent, 
according  to  the  distance  from  the  financial 
centers.  In  no  other  country  is  there  such  a 
wide  difference  in  normal  periods,  nor  such  a 
violent  fluctuation  in  abnormal  ones. 

After  the  panic  of  1907  legislation  was 
enacted  under  which  national  banks  may 
obtain  currency  from  the  Treasury  by  de- 
positing commercial  paper  or  securities  and 
paying  a  tax  of  6  per  cent.  This  would  enable 
them  to  continue  discounting  paper  even  in 
case  of  a  crisis.  The  measure  has  not  been 
availed  of,  and  is  concededly  imperfect  for  the 
complete  regeneration  of  the  system.  At  the 
same  time  (1908)  a  monetary  commission  was 
created  to  study  the  subject  and  report  adequate 
remedies.  This  report,  filed  January  191 2, 
recognizes  the  many  defects  in  the  system. 

The  Monetary  Commission 

The  Monetary  Commission  hence  proposes 
a  comprehensive  reform  under  which  the 
banks  of  the  country,  state  and  national,  may 
form  district  associations  and  become  feder- 
ated in  a  National  Association,  through  which 
they  may  at  all  times  be  able  to  obtain  cash 


Courtesy  of  the  Bank  of  New  York,  N.  A. 


CHECK  OF  AARON  BURR,  1784 


Caftilcr  of  the  Bank  of  New'Tork, 


Pay  to     /?'  '    ^' 


New  York,  th«. 


«r 


©r  Bearer, 
-,  Dollars. 


,     r?i.i<!<yf^'^^<^  , 


---^       , 


Courtesy  of  the  Bank  of  New  York,  N.  A. 


CHECK  OF  TALLEYRAND,  17^5 


THE     WORLD'S     PRINCIPAL    MONETARY     SYSTEMS 


upon  commercial  paper  under  certain  regu- 
lations. It  is  in  effect  the  creation  of  a  central 
bank  with  certain  limited  powers.  Thus  its 
shares  may  be  owned  only  by  banks  and  it 
may  do  business  only  with  banks  and  the 
Government,  except  as  to  international  busi- 
ness, which  is  to  be  done  mainly  for  the  pur- 
pose of  protecting  the  gold  supply. 

The  purpose  in  view  is  to  render  impossible, 
hereafter,  the  country-wide  suspension  of  cash 
payments  by  banks  entirely  solvent,  in  a 
period  of  panic  or  other  disturbance. 

Briefly  stated  the  individual  banks  are  to 
deposit  cash  reserve  with  the  National  Asso- 
ciation; national  banks  are  to  surrender  their 
note-issuing  powers  to  the  Association;  it  is 
to  hold  50  per  cent,  reserves  against  deposits 
and  notes,  and  to  discount  paper  for  the  indi- 
vidual banks  freely.  It  is  also  contemplated 
that  it  shall  fix  the  discount  rate  from  time  to 
time,  uniform  throughout  the  land.  To  restrain 
note-issues  a  system  of  graduated  taxing  of 
notes  is  provided  for,  which  may  reach  5  per 
cent,  or  even  9  per  cent,  in  certain  contin- 
gencies. This,  it  is  assumed,  will  furnish  the 
restraint;  but  it  is  also  provided,  as  a  final 
safeguard,  that  when  the  reserves  fall  to  333^ 
per  cent,  all  note-issuing  shall  cease  until  the 
reserve  is  restored. 

Following  this  brief  review  of  our  monetary 
history,  a  discussion  of  details  is  in  order. 

Ante-Bellum  Banking  Systems 

A  critical  examination  of  the  Constitution 
of  the  United  States  justifies  the  view  that  the 
Federal  Government  has  the  sole  power  of 
regidating  all  matters  relating  to  money. 

Congress  has  the  exclusive  power  to  "coin 
money,  regulate  the  value  thereof  and  of  for- 
eign coin  "  and  to  '^  fix  the  standards  of  weights 
and  measures"  (Art.  I,  sec.  8,  cl.  5);  the  states 
are  prohibited  from  emitting  "bills  of  credit" 
and  making  "anything  but  gold  and  silver  a  ten- 
der in  payment  of  debts"  (Art.  I,  sec.  10,  cl.  i). 

Hamilton,  the  first  Secretary  of  the  Treas- 
ury, accomplished  the  purpose  by  establishing 
the  first  Bank  of  the  United  States  (1791), 
despite  opposition  of  Jefferson  and  his  party, 
who  favored  the  state  banking  method.  The 
plan  worked  out  so  admirably  that  Gallatin 
and  many  other  Jeffersonians  had  to  concede 
the  wisdom  of  Hamilton.  Yet  the  opposition 
succeeded  in  defeating  the  continuation  of  the 
Bank  in  181 1 ;  then  the  state  system  proved  its 
total  inadequacy  and  the  second  Bank  of  the 
United  States  was  chartered  in  1816. 

The  constitutionality  of  the  second  charter 
was  attacked,  but  the  Supreme  Court  upheld 


it.  Later  the  right  of  states  to  charter  issue 
banks  was  questioned,  but  the  Supreme  Court 
refused  to  deny  them  that  power.  That  deci- 
sion brought  vicious  results. 

A  perusal  of  the  history  of  state  banking 
brings  home  to  us  the  remarkable  incapacity 
of  the  states  to  deal  properly  with  the  subject. 
Thousands  of  banks  were  chartered  to  issue 
notes  in  various  ways,  and  only  comparatively 
few,  in  the  early  days,  were  anything  but  bare- 
faced swindling  concerns,  empowered  to  mulct 
the  people,  under  apparent  obedience  to  so- 
called  banking  laws. 

The  only  explanation  of  the  tolerance  of  the 
people  of  these  conditions  is  found  in  the  dire 
need  for  currency  of  some  sort,  in  the  rapidly 
developing  new  sections  of  the  country.  Any- 
thing that  would  pass  was  employed  until  the 
value  depreciated  to  a  small  fraction  on  the 
dollar,  or  was  lost  entirely. 

In  many  cases  the  people  did  resent  the  im- 
position; in  the  older  states  the  laws  were 
gradually  improved;  in  some  of  the  others  the 
constitutions  were  amended  to  prohibit  issue 
banks,  and  other  measures  were  adopted;  but 
the  evil  continued  very  largely  until  the  state- 
bank  currency  was  taxed  out  of  existence  by 
Congress  in  1865-6;  for  while  a  considerable 
proportion  of  the  notes  were  by  that  time 
really  sound,  there  were  millions  of  dollars  of 
fluctuating  value,  some  worth  only  50  per 
cent,  of  their  face. 

In  some  of  the  states  note-issues  on  the  simple 
credit  of  the  banks  was  permitted;  in  others 
securities  had  to  be  deposited.  In  some  cases 
the  amounts  were  limited  to  capital;  in  others 
the  amount  might  be  several  times  the  capital. 
In  most  cases  where  credit-backing  alone  ex- 
isted it  proved  useless;  there  was  no  compul- 
sory redemption  of  notes  actually  enforced  in 
most  of  the  states.  Capital  was  frequently 
not  paid  in  with  money.  Securities  deposited 
were  frequently  partly  or  wholly  valueless. 

In  many  cases  the  states  endeavored  to 
remedy  matters  by  creating  state-controlled 
banks,  but  few  of  these  were  successful.  Of 
exceptional  merit  was  the  Indiana  State  Bank. 

In  Massachusetts  leading  banks  established 
what  was  known  as  the  "  Suffolk  Bank  System," 
by  which  the  banks  themselves  provided  regu- 
lation which  the  law  failed  to  give;  they  re- 
quired banks  to  redeem  their  notes  or  take  the 
consequences  of  being  placed  in  default.  It 
was  the  regulative  principle  applied  to  that 
section  of  the  country  and  made  New  England 
currency  sound  and  stable. 

It  is  noteworthy  that  no  actual  reserve  laws 
were  passed  anywhere  until  1842,  and  Louisiana 


13 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


has  the  credit  for  this  first  law;  and  the  results 
thereof  were  also  creditable. 

The  Central  Regulating  Feature 

The  destruction  of  the  central  bank  regu- 
lation was  an  economic  blunder,  attributable 
to  President  Jackson,  who  killed  the  second 
Bank  of  the  United  States  (1836)  despite  the 
fact  that  committees  in  Congress,  then  dom- 
inated by  his  own  party,  showed  conclusively 
that  the  Bank  was  furnishing  the  best  possible 
currency  system;  indeed,  the  country  has  never 
had  so  sound  and  stable  a  system  since. 

But  the  wrong  done  the  people  by  President 
Tyler  was  more  grave;  he  refused  to  approve 
bills  passed  by  Congress  pursuant  to  the  vote 
of  the  people  in  1840  for  the  re-establishment 
of  the  system,  although  he  had  been  elected 
upon  a  platform  pledging  such  action. 

The  only  step  taken  by  the  Federal  Govern- 
ment was  to  protect  its  own  cash,  with  which 
it  would  not  trust  the  state  banks  after  losing 
millions  in  the  defaults  of  1837;  it  provided  the 
sub-treasury  system,  made  its  revenues  payable 
in  coin,  and  often  had  so  much  coin  thus  locked 
up  that  the  banks  could  not  get  the  cash  for 
their  reserves. 

In  order  to  show  how  the  central  regulation 
was  provided  for,  the  charter  of  the  second 
bank  of  the  United  States  is  presented  upon 
other  pages.  That  of  the  first  Bank  was  quite 
similar  in  form.  It  will  be  noted  that  the 
Government  had  a  direct  interest  in  the  capital 
and  the  management. 

The  operations  of  the  Bank  were  in  general 
conducted  for  the  benefit  of  the  whole  country. 
Its  notes  alone  were  receivable  for  Government 
dues,  but  it  arranged  to  receive  the  notes  of  the 
state  banks  for  such  payments  (which  were 
for  that  time  very  large),  at  its  branches  all 
over  the  country,  provided  that  the  state  banks 
kept  the  notes  good;  that  is  to  say,  redeemed 
them  on  demand  and  for  that  purpose  kept 
some  coin  on  hand.  Some  of  the  state  banks 
rebelled  against  this;  they  wanted  to  redeem 
their  promises  to  pay  or  not  redeem  them,  as 
they  pleased;  but  business  judgment  finally 
brought  them  around  and  so  the  currency  be- 
came sound. 

The  Bank  made  it  a  special  duty  to  issue 
notes  freely  in  those  sections  of  the  country 
not  supplied  with  banking  facilities;  thus,  by 
far  the  greater  part  of  its  circulation  was  in  the 
new  South  and  West,  and  it  helped  to  develop 
those  regions  as  they  were  never  helped  before, 
and  relatively  speaking  they  have  not  had 
similar  help  since. 

It  did  the  Government's  business  free  of 


charge,  and  regulated  the  foreign  exchanges  so 
as  to  protect  the  coin  reserves.  The  appended 
statement  of  its  condition  in  1832,  shows  that 
had  it  been  continued,  with  such  changes  in 
its  charter  as  were  found  desirable,  it  would 
today  be  the  greatest  financial  institution  in 
the  world;  and  it  may  safely  be  said  that  it 
would  have  provided  us  with  a  system  under 
which  the  panics  that  destroyed  thousands  of 
millions  of  dollars  of  values  would  have  been 
obviated, 

A  statement  of  the  condition  of  the  Bank 
of  England  of  almost  identical  date,  follows, 
amounts  converted  into  dollars. 

The  banking  power  of  the  United  States  in 
1832  was  about  $250,000,000;  today  it  is  nearly 
$20,000,000,000.  The  Bank  of  England  in 
1832  reported  $220,000,000  of  resources;  today 
it  reports  $680,000,000.  It  is  obvious  that  if 
the  central-bank  system  here  had  developed 
with  the  country,  our  Bank  would  have  been  a 
larger  and  stronger  institution  than  Great 
Britain's  central  bank. 

Opinions   of  the   Utility    of  the 
Bank  of  the  United  States 

Richard  Rush,  Secretary  of  the  Treasury,  1828. 
(Whig). 

It  is  the  preservation  of  a  good  currency 
that  can  alone  impart  stability  to  prosperity 
and  prevent  those  fluctuations  in  its  value, 
hurtful  alike  to  individual  and  to  national 
wealth.  This  advantage  the  Bank  has  secured 
to  the  community.  The  state  banks  following 
or  controlled  by  its  example  have  shaped  their 
policy  towards  the  same  salutary  ends,  adding 
fresh  demonstrations  to  the  truth  that  under 
the  mixed  jurisdiction  and  powers  of  the  state 
and  national  systems  of  government,  a  national 
bank  is  the  instrument  alone  by  which  Con- 
gress can  effectively  regulate  the  currency  of 
the  Nation. 
Senate  Committee,  1829.  (Democrat). 

This  seems  to  present  a  state  of  currency 
approaching  as  near  to  perfection  as  could  be 
desired;  for  here  is  a  currency  issued  at  twenty- 
four  different  parts  of  the  Union,  obtainable  by 
any  citizen  who  has  money  or  credit.  It  is  not 
easy  to  imagine,  it  is  scarcely  necessary  to 
desire,  any  currency  better  than  this. 
House  Committee,  1830.  (Democrat). 

One  of  the  most  important  purposes  which 
the  Bank  was  designed  to  accomplish,  and 
which  it  is  confidently  believed  no  other  human 
agency  could  have  effected,  under  our  federa- 
tive system  of  government,  was  the  enforce- 
ment of  specie  payments  on  the  part  of  the 
numerous  local  banks,  deriving  their  charters 


15 


BUILDING  ERECTED  BY  THE  SECOND  BANK  OF  THE  UNITED  STATES  IN  1823, 
WALL  STREET,  NEW  YORK 


SECOND  BANK  OF  THE  UNITED  STATES,  PHILADELPHIA 

BUILDING  ERECTED  JOINTLY  BY  THE  SECOND  BANK  OF  THE  UNITED  STATES 
AND  THE  PHILADELPHIA  BANK  IN  1837. 


THE     WORLD'S     PRINCIPAL     MONETARY    SYSTEMS 


from  the  several  states,  and  whose  paper,  irre- 
deemable in  specie  and  illimitable  in  quantity, 
constituted  the  almost  entire  currency  of  the 
country.  Their  bills,  in  the  respective  spheres 
of  their  circulation  are  of  equal  value  with  gold 
and  silver. 

Gallatin  {then  president  of  a  state  bank) ,  1 830. 
(Democrat). 
The  general  complaint  on  the  part  of  many 
of  the  state  banks  that  they  are  checked  and 
controlled  in  their  operations  by  the  Bank  of 
the  United  States  is  the  best  evidence  that  its 
general  operation  is  such  as  had  been  intended. 
It  was  for  this  very  purpose  that  the  Bank 
was  estabhshed.    We  are  not  aware,  however, 


that  a  single  solvent  bank  has  been  injured  by 
that  of  the  United  States. 
Ingham,  Jackson^s  Secretary  of  Treasury,  1832. 
(Democrat). 
The  Bank  has  purified  one  of  the  worst  cur- 
rencies that  ever  infested  any  country  or  people, 
has  given  us  the  best  currency  known  among 
nations,  equal  with  gold  and  silver  in  every 
part  of  the  Union.  It  preserves  a  uniform 
value  in  the  paper  of  the  local  banks,  gives 
stability  to  the  value  of  all  property,  to  the 
incalculable  benefit  of  commerce;  maintains 
domestic  exchanges  at  less  premium  than  it 
would  cost  to  transfer  specie. 


STATEMENT  OF   THE   BANK  OF  THE   UNITED   STATES 

March  2,  1832 
Assets  Liabilities 


Bills  discounted  on — 

Personal  securit}^  .$45,850,367.27 

Bank  stock 620,766.14 

Other  stocks 2,145,895.20 

48,617,028.61 
Domestic    bills    of    ex- 
change     20,354,748.79 

$68,971,777.40 

Foreign  bills  of  exchange 91,238.23 

Due  from — 

Bank  United  States 

and  offices 29,288,810.19 

State  banks 3,752,822.73 

33,041,632.92 

United  States 5,267.32 

Real  estate 2,131,359.64 

Deficiencies 122,973.18 

Banking  houses 1,163,691.92 

Expenses 106,720.02 

Cash,  viz: 

Notes  of  bank  Uni- 
ted States 18,401,011.03 

Notes  of  state 

banks 2,836,900.40 

Specie 6,799,753.63 

28,037,665,06 

Mortgages 89,573.78 . 

Navy  agent,  Norfolk 40,144.17 


Capital  stock 

Notes  issued 

Discount,  exchange  and  interest 

Foreign-exchange  account 

Due  foreign  bankers 

Dividends  unclaimed 

Profit  and  loss 

Contingent  fund $5,613,346.20 

Less  losses  chargeable  to 

contingent  fund.  .     3,477,737-29 


Due  to — 

Bank  United  States 

and  offices. ......   28,461,352.88 

State  banks 2,600,270.50 


$133,802,043.64 


Fund  for  extinguishing  cost  of  banking 

houses 

Redemption  of  public  debt 

Deposits,  viz: 

On  account  of  Treas- 
urer U.  S 6,781,114.55 

Less  overdrafts  and 

special  deposits. . .        260,976.99 


$35,000,000.00 
42,118,452.13 

855,958.17 
371,610.55 

1,876,802.39 
166,432.73 

1,750,263.52 


2,135,608.91 


31,061,623.38 

551,292.05 
857,613.12 


Of  public  officers . 
Of  individuals . . . . 


6,520,137.56 
1,719,489.32 
8,816,759.81 


17,056,386.69 
$133,802,043.64 


Note. — The  items  due  from  the  Bank  and  its  offices,  and  notes  on  hand  in  cash,  are  in  a  sense  duplications ; 
so  that  the  net  total  would  be  about  $82,800,000. 

STATEMENT  OF  THE   BANK  OF  ENGLAND 
February  29,  1832 
Assets  Liabilities 


Advances  to  Government — Ordinary $20,675,000 

— Special 54,489,000 

Discounts  and  loans 45,834,000 

Government  securities 73,434,000 

Cash 26,465,000 

Total $220,897,000 


Capital $72,765,000 

Surplus 13,189,000 

Notes 90,258,000 

Public  deposits 15,993,000 

Private  deposits 28,692,000 

Total $220,897,000 


17 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


Daniel  Webster,  1836.  (Whig). 

It  has  reformed  the  currency,  sustained  it 
when  reformed,  and  upheld  a  system  of  internal 
exchange,  safe,  cheap,  and  of  unprecedented 
and  unparalleled  facility.  No  country  has 
seen  the  like;  nor  shall  we  see  it  soon  again 
when  the  operations  of  the  Bank  shall  cease. 
Lincoln,  1839.  (Whig). 

We  do  not  pretend  that  a  national  bank  can 
establish  and  maintain  a  sound  and  uniform 
currency  in  the  country  in  spite  of  the  national 
government,  but  we  do  say  that  is  has  estab- 
lished and  maintained  such  a  currency,  and 
can  do  so  again,  by  the  aid  of  that  government; 
and  we  further  say  that  no  duty  is  more  im- 
perative on  that  government  than  the  duty  it 
owes  the  people  of  furnishing  them  a  sound  and 
uniform  currency. 

The  National  System 

'  The  nationalization  of  our  currency  during 
the  Civil  War  period  was  a  wise  policy  poorly 
executed.  The  issue  of  United  States  legal- 
tender  notes,  without  providing  for  redemption, 
was  the  worst  feature ;  it  was  followed  after  the 
War  by  a  repudiation  of  distinct  pledges  for 
their  redemption.  Thus  the  fluctuating,  hence 
cheating,  currency  of  the  ante-bellum  period 
was  continued  in  another  form  until  resump- 
tion in  1879.  These  "greenbacks"  continue 
part  of  our  currency  today  although  clearly 
improper;  they  are  rendered  fairly  safe  by  the 
$150,000,000  reserve  fund,  as  the  amount  is 
limited  by  law  to  $346,616,000;  nevertheless 
they  constitute  a  possible  menace  to  the  sta- 
bility of  the  system. 

While  the  national  bank  system  was  largely 
created  to  help  the  Government  sell  its  bonds, 
it  has  distinctly  admirable  features  justifying 
its  creation,  in  the  absence  of  central  bank 
regulation.  It  provided  bank  notes  of  uniform 
value,  although  they  were  also  depreciated 
until  1879,  being  redeemable  only  in  depre- 
ciated greenbacks.  The  bonds  required  to  be 
deposited  to  secure  notes  assured  their  redemp- 
tion in  case  of  failure.  But  since  the  profit 
depends  upon  the  price  of  Government  bonds, 
note-issuing  has  never  been  in  response  to 
business  needs;  the  system  lacks  elasticity;  of- 
ten more  notes  are  issued  when  business  needs 
are  slack,  and  vice  versa.  The  only  sound 
theory  of  bank-note  issues  is  that  they  shall 
come  into  existence  as  business  needs  arise,  and 
be  withdrawn  when  the  needs  pass.  As  our 
system  does  not  so  respond,  it  causes  periodic 
inflation. 

It  was  attempted  to  correct  some  defects  in 
the  legislation  of  1900;  small  banks,  with  cap- 


ital $25,000  were  authorized  for  smaller  com- 
munities; a  2  per  cent,  bond  issue  was  provided 
for,  but  in  a  manner  that  has  proved  unsatis- 
factory. The  net  result  has  been  to  extend 
the  national  banking  system — a  good  feature — 
and  to  inflate  the  currency — a  bad  one. 

But  as  a  banking  instrumentality  the  na- 
tional system  is  entitled  to  high  credit;  it  em- 
bodies the  best  principles  to  govern  the  business 
yet  devised  for  the  country.  The  defects  there- 
in relate  almost  entirely  to  the  reserve  require- 
ments. Thus  the  provision  that  "country" 
banks,  by  far  the  most  numerous,  must  have 
15  per  cent,  reserves  but  may  have  9  per  cent, 
in  "reserve"  banks;  that  reserve  banks  except 
those  in  the  three  chief  centers  must  hold  25 
per  cent,  but  may  have  half  thereof  on  de- 
posit in  the  "central  reserve"  banks  where  25 
per  cent,  all  in  cash  must  be  held,  operates  de- 
fectively. 

On  the  one  hand  it  tends  to  concentrate  cash 
in  the  centers  under  conditions  that  make  it 
imperative  to  loan  the  greater  part  in  the  spec- 
ulative market;  on  the  other  hand  by  holding 
a  rigid  "dead  line"  on  the  banks,  loaning  is 
curtailed  at  the  very  times  when  it  is  needed 
most. 

It  thus  happens  that  in  case  of  stress  many 
banks,  entirely  solvent,  are  compelled  to  sus- 
pend operations;  unable  to  get  their  cash  back 
from  the  centers  without  great  pressure,  result- 
ing in  a  stock  market  "squeeze,"  and  unable 
to  use  their  unquestionable  assets  by  way  of 
rediscounts,  as  is  done  in  Europe,  they  are  tied 
up. 

The  practice,  unauthorized  by  law,  of  using 
such  assets  with  clearing-house  associations  to 
serve  as  backing  for  the  issue  of  a  quasi-cur- 
rency  (clearing-house  certificates),  suggested 
(i)  the  law  of  1908,  under  which  national  banks 
may  obtain  currency  from  the  Government  on 
deposit  of  commercial  paper  and  securities 
other  than  Government  bonds;  and  (2)  the 
Monetary  Commission's  plan  already  referred 
to. 

If  we  can  thus  substitute  for  the  present 
bank-notes,  almost  fixed  in  amount,  an  issue 
which  will  adapt  itself  as  to  volume  to  the 
changing  needs;  and  if  we  regulate  the  reserve 
to  be  held  by  the  central  issuing  institution  so 
that  instead  of  being  rigid  it  will  be  sufficiently 
elastic  to  adapt  itself  to  conditions;  and  if  we 
thus  make  available  an  ample  supply  of  cur- 
rency to  meet  the  call  of  all  our  banks;  we  shall 
have  solved  the  problem  before  us.  But  there 
are  still  many  features  in  the  measure  proposed 
for  the  solution  that  do  not  serve  the  end  in 
view,  hence  the  plan  requires  amendment. 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


Deposit-Currency 

It  is  within  the  mark  to  say  that  this  form 
of  our  money-means  requires  the  closest  atten- 
tion in  devising  correctives  for  existing  evils. 
The  Comptroller  of  the  Currency's  reports  in- 
dicate that  the  commercial  deposits  of  the 
country  have  grown  to  $12,500,000,000;  mu- 
tual savings  banks'  deposits  aggregate  $3,500,- 
000,000  more;  against  all  this  vast  liability  the 
cash  reserves  are  $1,451,000,000,  or  an  average 
of  a  trifle  over  9  per  cent.  When  by  reason  of 
business  expansion,  proper  and  improper,  the 
volume  of  these  obligations  expands  without 
a  corresponding  increase  in  cash,  the  result  un- 
der the  existing  system  is  certain  to  be  dis- 
astrous, as  was  shown  in  1907.  In  that  year 
the  deposits  aggregated  $13,100,000,000,  and 
the  cash  $1,113,700,000,  or  only  8  per  cent. 

It  is  not  contended  that  the  reserve  cash  of 
the  country  is  too  slender  if  other  conditions 
prevailed;  but  with  27,000  individual,  and  for 
the  most  part  isolated,  banks,  it  is  not  adequate 
for  a  crisis.  Therefore  the  problem  involves 
the  utilization  of  the  country's  reserves  so  as 
to  effectively  protect  the  credit  of  the  banks. 
This  the  reform  plan  proposes  to  do  by  con- 
centrating a  substantial  part  of  the  reserve 
gold  and  issuing  the  central  institution's  notes 
to  double  the  amount  of  this  gold,  which  notes 
are  to  be  available  for  reserves,  and  in  case  of 
need  the  volume  of  notes  may  be  expanded  to 
three- fold  the  gold  reserve. 

But  an  equally  important  feature  is  that 
which  contemplates  that  local  banks'  reserves 
shall  be  made  uniform  by  legal  regulation, 
instead  of  having  48  different  regulative  codes. 
Moreover,  the  central  institution  as  the  credit- 
extender  to  the  individual  banks,  is  to  exercise 
a  certain  degree  of  supervision  over  them ;  this 
is  calculated  to  restrain  undue  expansion  of 
liabilities  through  the  creation  of  loans  beyond 
the  proper  commercial  demands;  it  being,  how- 
ever, recognized  in  the  plan  that  all  such  proper 
demands  are  to  be  met  without  question,  as 
the  prime  function  of  the  reformed  system. 

In  order  to  accomplish  the  purpose  in  view 
it  is  obviously  necessary  to  include  in  the 
regulation  all  banking  institutions;  for  since 
those  of  them  chartered  by  the  states  are  at 
present  preponderant,  so  far  as  their  deposit 
functions  go,  the  country  would  not  be  ade- 
quately served  if  more  than  half  of  the  deposit- 
currency  were  outside  the  regulative  influences 
designed  to  bring  about  uniformity. 

Hence  it  is  contemplated  to  extend  the  system 
proposed  over  all  institutions,  ignoring  for  the 
specific  end  in  view  all  state  lines  and  state  laws; 
yet  superseding  the  latter  only  in  those  particu- 


lars where  necessary  to  accomplish  the  purpose. 
It  is  definitely  set  forth  that  there  is  to  be  no  com- 
petition with  individual  banks,  for  business  in 
any  sense,  on  the  part  of  the  central  institution. 
A  further  purpose  in  view  is  the  equalization 
of  discount  rates  by  empowering  the  central 
institution  to  fix  a  uniform  rate.  This  may 
eventually  be  accomplished,  but  the  extent  of 
the  country,  the  diversified  interests,  the  un- 
equal distribution  of  the  supply  of  capital  and 
banking  facilities,  will  prevent  the  realiza- 
tion of  this   desirable  end  for  some  time. 

The  Monetary  Commission  Bill 

In  principle  the  bill  of  the  Monetary  Com- 
mission manifestly  offers  the  correct  solution 
to  our  problems.  As  it  stands,  it  is,  however, 
defective  in  these  particulars: 

1 .  It  excludes  thousands  of  small  banks,  which 

need  its  support  as  much  as  the  larger  ones. 

2.  It  calls  for  too  large  capital  contributions 

from  the  banks. 

3.  It  does  not  permit  sufficient  participation 

to  the  Government,  i.  e.  the  people,  in 
the  management. 

4.  It  does  not  adequately  prevent  undue 

expansion,  the  chief  present  danger. 

5.  It  provides  for  fixing  a  uniform  discount 

rate,  which  is  impracticable. 

6.  It  does  not  firmly  place  the  central  insti- 

tution upon  the  gold  basis. 

7.  It  imposes  an  unreasonable  burden  upon 

the  banks  to  retire  the  2  per  cent,  bonds 
now  held  to  secure  note-issues. 

A  very  important  function  not  yet  referred  to  is 
that  of  regulating  the  foreign  exchanges, for  which 
the  central  institution  is  given  ample  powers. 
This  wall  result  in  affording  adequate  protection 
to  our  gold  supply  upon  which  the  reserves,  and 
hence  the  stability  of  the  structure,  depend. 

If  the  plan  is  properly  perfected  it  is  quite 
certain  that  it  will  provide  practically  insurance 
to  all  solvent  banks  against  suspension  in 
panicky  periods  and  enlarge  their  capacity  for 
service  in  their  communities;  yet  this  may  not 
constitute  sufficient  inducement  to  bring  all 
the  banks  into  the  association. 

Since,  however,  such  a  plan  will  unquestion- 
ably be  of  enormous  service  to  the  Nation,  not 
merely  to  business,  but  to  all  the  people,  it  is  to 
be  hoped  that  aside  from  altruistic,  patriotic 
motives,  there  may  be  other  inducements  which 
will  serve  to  assure  its  adoption  when  perfected. 

It  should  be  said  that  the  practice  of 
branch  banking,  so  generally  and  successfully 
conducted  in  other  countries,  is  out  of  the 
question  here,  as  it  would  destroy  the  system 
of  individual  banks,  which  has  come  to  stay. 


19 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


BANKING   STATISTICS,   UNITED   STATES 
I.     Deposits  and  Cash  in  All  Banks,  1861-1911  (in  Millions  of  Dollars) 


1861 

1871 

1881 

1891 

1901 

1911 

National  Banks 

296 
150* 

602 
100* 

50* 
190* 

1032 
261 

112 
242 

1535 

557 

355 

95 

2941 

1611 

1271 

119 

5478 
2778 

State  Banks 

Trust  Companies 

Private  Banks 

3296 
142 

All  Commercial 

446 
147 

942 
651 

1647 
892 

2542 
1655 

5942 
2518 

11694 
4212 

Savingst 

Total 

593 

1593 

2539 

4197 

8460 

15906 

Cash 

Percent.  Cash 

got 

15-2$ 

194 

12.2 

295 
II. 6 

479 
II. 4 

795 
9-4 

1545 
9-7 

*  No  statistics;  amounts  estimated, 

t  Includes  stock  savings  banks  part  of  which  are  commercial  deposits. 

X  This  included  cash  reserves  against  notes  also,  hence  the  high  ratio. 

The  decrease  in  the  ratio  of  cash  is  quite  marked. 

II.    Significant  Features,  in  1901  and  1911   (Amounts  in  Millions  of  Dollars) 
These  figures  are  from  mid-year  reports. 


Number 

Capital 

Deposits 

Due  Banks 

Notes 

Aggregates 

Loans 

Securities 

Due  from  Banks 
Cash 


I90I 

1911 

State 
Banks 

Trust 
Co.'s 

National 
Banks 

Totals 

State 
Banks 

Trust 
Co.'s 

National 
Banks 

Totals 

4,983 

334 

4,16s 

9,482 

12,864 

1,251 

7,277 

21,392 

255 
i,6ii 

"5 

137 

1,271 

8 

646 

2,942 
1,207 

319 

1,038 

4,824 

1,330 

319 

453 

2,778 

145 

386 

3,296 

319 

1,020 

5,478 

2,147 

682 

1, 859 

11,552 

2,611 

682 

2,161 

1,615 

5,676 

9,452 

3,748 

4,665 

10,383 

18,796 

1,184 
242 
314 

175 

940 
396 
192 

25 

2,957 
876 
788 
536 

5,081 

1,514 

1,284 

736 

2,439 
315 
526 

237 

! 

2,429 

1,115 
618 
270 

5,611 

1,753 

1,377 

949 

10,479 
3,183 
2,521 
1,453 

The  increase  in  the  trust  companies'  business  is  noteworthy. 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 

BANKING    STATISTICS,    UNITED    ^T ^TKS  —  Coniinued 
III.    National  Banks  by  Classes,  1901  and  191  i  (Amounts  in  Millions  of  Dollars) 


July,  1 901 


June,  1911 


Coxmtry  j  Reserve  '   Central      Country  I  Reserve      Central 
Banks        Banks       Reserve        Banks        Banks       Reserve 


Deposits .' 1,468  i         707     I         767 

Due  to  Banks 127  446  634 

Net  Deposits* 1,523  1,006  1,081 

Loans ' 1,315  797  845 

Securities !  476  !         212  188 

Due  from  Banks 396  270  122 

Cash 133  129  274 

Resources,  all 2,460  1,515  1,700 

Cash  to  Net  Deposits '. 8.7%  12.9%  25.4% 


3.091 

242 

3,160 

2,776 

1,014 

6x8 

244 

4,903 

7.7% 


1,337 

856 

1,849 

1,496 

406 

SS7 
246 

2,880 
13-3% 


1,050 

'1,049 
1,680 

1,339 

202 
456 

2,600 

27-1% 


*  "Net  Deposits"  signifies  deposits  plus  amounts  due  banks,  less  amoimts  due  from  banks  (not  reserve  agents) 
and  checks  on  other  banks;  this  is  the  basis  for  the  reserve  calculation  under  the  law. 


Charter  of  the  Second  Bank  of  the  United  States 

[Fourteenth  Congress,  first  session,  chapter  44.     1816.] 
An  act  to  incorporate  the  subscribers  to  the  Bank  of  the  United  States. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States  of  A  tnerica,  in 

Congress  assembled,  That  a  bank  of  the  United  States  of  America  shall  be  established,  with  a 

A   bank  of  the      capital  of  thirty-five  millions  of  dollars,  divided  into  three  hundred  and  fifty  thousand  shares. 

United    States,       of  one  hundred  dollars  each  share.    Seventy  thousand  shares,  amounting  to  the  sum  of  seven 

with  a  capital  of      millions  of  dollars,  part  of  the  capital  of  the  said  bank,  shall  be  subscribed  and  paid  for  by  the 

$35,000,000,  etc.         United  States,  in  the  manner  hereinafter  specified;  and  two  hundred  and  eighty  thousand  shares, 

amounting  to  the  sum  of  twenty-eight  millions  of  dollars,  shall  be  subscribed  and  paid  for  by 

individuals,  companies,  or  corporations,  in  the  manner  hereinafter  specified. 

Sec.  2.  And  be  it  further  enacted,  That  subscriptions  for  the  sum  of  twenty-eight  millions  of 
dollars,  towards  constituting  the  capital  of  the  said  bank,  shall  be  opened  on  the  first  Monday  in 
July  next,  at  the  following  places:  that  is  to  say,  at  Portland,  in  the  District  of  Maine;  at  Ports- 
Places,  etc.,  for      mouth,  in  the  State  of  New  Hampshire;  at  Boston,  in  the  State  of  Massachusetts;  at  Providence, 
receiving      sub-       in  the  State  of  Rhode  Island;   at  Middletown,  in  the  State  of  Connecticut;    at  Burlington,  in 
scriptions.  the  State  of  Vermont;  at  New  York,  in  the  State  of  New  York;  at  New  Brunswick,  in  the  State 

of  New  Jersey;  at  Philadelphia,  in  the  State  of  Pennsylvania;  at  Wilmington,  in  the  State  of 
Delaware;  at  Baltimore,  in  the  State  of  Maryland;  at  Richmond,  in  the  State  of  Virginia;  at 
Lexington,  in  the  State  of  Kentucky;  at  Cincinnati,  in  the  State  of  Ohio;  at  Raleigh,  in  the 
State  of  North  Carolina;  at  Nashville,  in  the  State  of  Tennessee;  at  Charleston,  in  the  State  of 
South  Carolina;  at  Augusta,  in  the  State  of  Georgia,  at  New  Orleans,  in  the  State  of 
Louisiana;  and  at  Washington,  in  the  district  of  Columbia.  And  the  said  subscriptions  shall  be 
opened  under  the  superintendence  of  five  commissioners  at  Philadelphia,  and  of  three  commis- 
sioners at  each  of  the  other  places  aforesaid,  to  be  appointed  by  the  President  of  the  United 
States,  who  is  hereby  authorized  to  make  such  appointments,  and  shall  continue  open  ever\' 
day,  from  the  time  of  opening  the  same,  between  the  hours  of  ten  o'clock  in  the  forenoon  and  four 
o'clock  in  the  afternoon,  for  the  term  of  twenty  days,  exclusive  of  Sundays,  when  the  same  shall 
be  closed,  and  immediately  thereafter  the  commissioners,  or  any  two  of  them,  at  the  respective 
Places,  etc.,  for  places  aforesaid,  shall  cause  two  transcripts  or  copies  of  such  subscriptions  to  be  made,  one  of 
receiving  sub-  which  they  shall  send  to  the  Secretary  of  the  Treasury,  one  they  shall  retain,  and  the  original 
scriptions,  etc.  they  shall  transmit,  within  seven  days  from  the  closing  of  the  subscriptions  as  aforesaid,  to  the 

commissioners  at  Philadelphia,  aforesaid.  And  on  the  receipt  of  the  said  original  subscriptions, 
or  of  either  of  the  said  copies  thereof,  if  the  original  be  lost,  mislaid,  or  detained,  the  commis- 
sioners at  Philadelphia  aforesaid,  or  a  majority  of  them,  shall  immediately  thereafter  convene, 
and  proceed  to  take  an  account  of  the  said  subscriptions.  And  if  more  than  the  amount  of 
twenty-eight  milHons  of  dollars  shall  have  been  subscribed,  then  the  said  last  mentioned  com- 
missioners shall  deduct  the  amount  of  such  excess  from  the  largest  subscriptions,  in  such  manner 
as  that  no  subscription  shall  be  reduced  in  amount,  while  any  one  remains  larger:  Provided, 
That  if  the  subscriptions  taken  at  either  of  the  places  aforesaid  shall  not  exceed  three  thousand 
shares,  there  shall  be  no  reduction  of  such  subscriptions,  nor  shall,  in  any  case,  the  subscriptions 
taken  at  either  of  the  places  aforesaid  be  reduced  below  that  amount.    And  in  case  the  aggregate 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


Regulations 
concerning  sub- 
scriptions and 
payments  on 
them,  etc. 


April  10,  1806, 
ch.  22. 


Reasonable 
compensation  to 
the  commissioners. 


The  United- 
States  may  redeem 
the  funded  debt,, 
etc.,  and  the  bank 
may  sell  for  gold 
and  silver,  etc. 


amount  of  the  said  subscriptions  shall  exceed  twenty-eight  millions  of  dollars,  the  said  last  men- 
tioned commissioners,  after  having  apportioned  the  same  as  aforesaid,  shall  cause  lists  of  the 
said  apportioned  subscriptions,  to  be  made  out,  including  in  each  list  the  apportioned  subscription 
for  the  place  where  the  original  subscription  was  made,  one  of  which  lists  they  shall  transmit  to 
the  commissioners  or  one  of  them  under  whose  superintendence  such  subscriptions  were  originally 
made,  that  the  subscribers  may  thereby  ascertain  the  number  of  shares  to  them  respectively 
apportioned  as  aforesaid.  And  in  case  the  aggregate  amount  of  the  said  subscriptions  made 
during  the  period  aforesaid,  at  all  the  places  aforesaid,  shall  not  amount  to  twenty-eight  millions 
of  dollars,  the  subscriptions  to  complete  the  said  sum  shall  be  and  remain  open  at  Philadelphia 
aforesaid,  under  the  superintendence  of  the  commissioners  appointed  for  that  place,  and  the 
subscriptions  may  be  then  made  by  any  individual,  company,  or  corporation,  for  any  number 
of  shares  not  exceeding,  in  the  whole,  the  amount  required  to  complete  the  said  sum  of  twenty- 
eight  millions  of  dollars. 

Sec.  3.  And  be  it  further  enacted.  That  it  shall  be  lawful  for  any  individual,  company,  cor- 
poration or  state,  when  the  subscriptions  shall  be  opened  as  herein  before  directed,  to  subscribe 
for  any  number  of  shares  of  the  capital  of  the  said  bank,  not  exceeding  three  thousand  shares, 
and  the  sums  so  subscribed  shall  be  payable,  and  paid,  in  the  manner  following;  that  is  to  say, 
seven  millions  of  dollars  thereof  in  gold  or  silver  coin  of  the  United  States,  or  in  gold  coin  of 
Spain,  or  the  dominions  of  Spain,  at  the  rate  of  one  hundred  cents  for  every  twenty-eight  grains 
and  sixty  hundredths  of  a  grain  of  the  actual  weight  thereof,  or  in  other  foreign  gold  or  silver  coin 
at  the  several  rates  prescribed  by  the  first  section  of  an  act  regulating  the  currency  of  foreign 
coins  in  the  United  States,  passed  tenth  day  of  April,  one  thousand  eight  hundred  and  six,  and 
twenty-one  millions  of  dollars  thereof  in  like  gold  or  silver  coin,  or  in  the  funded  debt  of  the 
United  States  contracted  at  the  time  of  the  subscriptions  respectively.  And  the  payments  made 
in  the  funded  debt  of  the  United  States,  shall  be  paid  and  received  at  the  following  rates:  that  is 
to  say,  the  funded  debt  bearing  an  interest  of  six  per  centum  per  annum,  at  the  nominal  or  par 
value  thereof,  the  funded  debt  bearing  an  interest  of  three  per  centum  per  annum,  at  the  rate  of 
sixty-five  dollars  for  every  sum  of  one  hundred  dollars  of  the  nominal  amount  thereof,  and  the 
funded  debt  bearing  an  interest  of  seven  per  centum  per  annum,  at  the  rate  of  one  hundred  and 
six  dollars  and  fifty-one  cents,  for  every  sum  of  one  hundred  dollars  of  the  nominal  amount 
thereof;  together  with  the  amount  of  the  interest  accrued  on  the  said  several  denominations  of 
funded  debt,  to  be  computed  and  allowed  to  the  time  of  subscribing  the  same  to  the  capital  of 
the  said  bank  as  aforesaid.  And  the  payments  of  the  said  subscriptions  shall  be  made  and 
completed  by  the  subscribers,  respectively,  at  the  times  and  in  the  manner  following;  that  is 
to  say,  at  the  time  of  subscribing  there  shall  be  paid  five  dollars  on  each  share,  in  gold  or  silver 
coin  as  aforesaid,  and  twenty-five  dollars  more  in  coin  as  aforesaid,  or  in  funded  debt  as  afore- 
said; at  the  expiration  of  six  calendar  months  after  the  time  of  subscribing,  there  shall  be  paid 
the  further  sum  of  ten  dollars  on  each  share,  in  gold  or  silver  coin  as  aforesaid,  and  twenty-five 
dollars  more  in  coin  as  aforesaid,  or  in  funded  debt  as  aforesaid;  at  the  expiration  of  twelve 
calendar  months  from  the  time  of  subscribing,  there  shall  be  paid  the  further  sum  of  ten  dollars 
on  each  share  in  gold  or  silver  coin  as  aforesaid,  and  twenty-five  dollars  more,  in  coin  as  afore- 
said, or  in  funded  debt  as  aforesaid. 

Sec.  4.  And  be  it  further  enacted,  That  at  the  time  of  subscribing  to  the  capital  of  the  said 
bank  as  aforesaid,  each  and  every  subscriber  shall  deliver  to  the  commissioners,  at  the  place  of 
subscribing,  as  well  the  amount  of  their  subscriptions  respectively  in  coin  as  aforesaid,  as  the 
certificates  of  funded  debt,  for  the  funded  debt  proportions  of  their  respective  subscriptions, 
together  with  a  power  of  attorney,  authorizing  the  said  commissioners,  or  a  majority  of  them, 
to  transfer  the  said  stock  in  due  form  of  law  to  "  the  president,  directors,  and  company  of  the 
bank  of  the  United  States, ' '  as  soon  as  the  said  bank  shall  be  organized.  Provided  always,  That 
if,  in  consequence  of  the  apportionment  of  the  shares  in  the  capital  of  the  said  bank  among  the 
subscribers,  in  the  case,  and  in  the  manner,  herein  before  provided,  any  subscriber  shall  have 
delivered  to  the  commissioners,  at  the  time  of  subscribing,  a  greater  amount  of  gold  or  silver  coin 
and  funded  debt  than  shall  be  necessary  to  complete  the  payments  for  the  share  or  shares  to 
such  subscribers,  apportioned  as  aforesaid,  the  commissioners  shall  only  retain  so  much  of  the 
said  gold  or  silver  coin,  and  funded  debt,  as  shall  be  necessary  to  complete  such  payments,  and 
shall,  forthwith,  return  the  surplus  thereof,  on  application  for  the  same,  to  the  subscribers  law- 
fully entitled  thereto.  And  the  commissioners,  respectively,  shall  deposit  the  gold  and  silver 
coin,  and  certificates  of  public  debt  by  them  respectively  received  as  aforesaid  from  the  sub- 
scribers to  the  capital  of  the  said  bank,  in  some  place  of  secure  and  safe  keeping,  so  that  the  same 
may  and  shall  be  specifically  delivered  and  transferred,  as  the  same  were  by  them  respectively 
received,  to  the  president,  directors,  and  company,  of  the  bank  of  the  United  States,  or  to  their 
order,  as  soon  as  shall  be  required  after  the  organizaUon  of  the  said  bank.  And  the  said  com- 
missioners appointed  to  superintend  the  subscriptions  to  the  capital  of  the  said  bank  as  aforesaid, 
shall  receive  a  reasonable  compensation  for  their  services  respectively,  and  shall  be  allowed  all 
reasonable  charges  and  expenses  incurred  in  the  execution  of  their  trust,  to  be  paid  by  the  presi- 
dent, directors,  and  company,  of  the  bank,  out  of  the  funds  thereof. 

Sec.  5.  And  be  it  further  enacted.  That  it  shall  be  lawful  for  the  United  States  to  pay  and 
redeem  the  funded  debt  subscribed  to  the  capital  of  the  said  bank  at  the  rates  aforesaid,  in 
such  sums,  and  at  such  times,  as  shall  be  deemed  expedient,  anything  in  any  act  or  acts  of  Con- 
gress to  the  contrary  thereof  notwithstanding.  And  it  shall  also  be  lawful  for  the  president, 
directors,  and  company,  of  the  said  bank  to  sell  and  transfer,  for  gold  and  silver  coin,  or  bullion, 
the  funded  debt  subscribed  to  the  capital  of  the  said  bank  as  aforesaid:     Provided  always,  That 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


The  subscribers 
to  the  bank  incor- 
porated, etc. 


Corporate  name 


they  shall  not  sell  more  thereof  than  the  sum  of  two  millions  of  dollars  in  any  one  year;  nor 
sell  any  part  thereof  at  any  time  within  the  United  States,  without  previously  giving  notice 
of  their  intention  to  the  Secretary  of  the  Treasury,  and  offering  the  same  to  the  United  States 
for  the  period  of  fifteen  days,  at  least,  at  the  current  price,  not  exceeding  the  rates  aforesaid. 
The    Secretary  Sec.  6.  And  be  it  further  enacted,  That  at  the  opening  of  subscription  to  the  capital  stock 

of  the  Treasury  to  of  the  said  bank,  the  Secretary  of  the  Treasury  shall  subscribe,  or  cause  to  be  subscribed,  on 
subscribe  on  behalf  behalf  of  the  United  States,  the  said  number  of  seventy  thousand  shares,  amounting  to  seven 
of   the    United  millions  of  dollars,  as  aforesaid,  to  be  paid  in  gold  or  silver  coin,  or  in  stock  of  the  United  States, 

States,  etc.  bearing  interest  at  the  rate  of  five  per  centum  per  annum;  and  if  payment  thereof,  or  of  any  part 

thereof,  be  made  in  public  stock,  bearing  interest  as  aforesaid,  the  said  interest  shall  be  payable 
quarterly,  to  commence  from  the  time  of  making  such  paj^ment  on  account  of  the  said  sub- 
scription, and  the  principal  of  the  said  stock  shall  be  redeemable  in  any  sums,  and  at  any  periods, 
which  the  Government  shall  deem  fit.  And  the  Secretary  of  the  Treasury  shall  cause  the  certi- 
ficates of  such  public  stock  to  be  prepared,  and  made  in  the  usual  form,  and  shall  pay  and  deliver 
the  same  to  the  president,  directors,  and  company,  of  the  said  bank  on  the  first  day  of  January, 
one  thousand  eight  hundred  and  seventeen,  which  stock  it  shall  be  lawful  for  the  said  president, 
directors,  and  company,  to  sell  and  transfer  for  gold  and  silver  coin  or  bullion,  at  their  discretion : 
Provided,  They  shall  not  sell  more  than  two  million  of  dollars  thereof  in  any  one  year. 

Sec.  t.  And  be  it  further  enacted,  That  the  subscribers  to  the  said  bank  of  the  United  States 
of  America,  their  successors  and  assigns,  shall  be,  and  are  hereby,  created  a  corporation  and 
body  politic,  by  the  name  and  style  of  "The  president,  directors,  and  company  of  the  bank 
of  the  United  States, "  and  shall  so  continue  until  the  third  day  of  March,  in  the  year  one  thousand 
eight  hundred  and  thirty-six,  and  by  that  name  shall  be,  and  are  hereby,  made  able  and  capable, 
in  law,  to  hav-e,  purchase,  receive,  possess,  enjoy,  and  retain,  to  them  and  their  successors, 
lands,  rents,  tenements,  hereditaments,  goods,  chattels  and  effects,  of  whatsoever  kind,  nature, 
and  quality,  to  an  amount  not  exceeding,  in  the  whole,  fifty-five  millions  of  dollars,  including 
the  amount  of  the  capital  stock  aforesaid;  and  the  same  to  sell,  grant,  demise,  ahen  or  dispose  of; 
to  sue  and  be  sued,  plead  and  be  impleaded,  answer  and  be  answered,  defend  and  be  defended, 
in  all  state  courts  having  competent  jurisdiction,  and  in  any  circuit  court  of  the  United  States; 
and  also  to  make,  have,  and  use,  a  common  seal,  and  the  same  to  break,  alter,  and  renew,  at 
their  pleasure;  and  also  to  ordain,  establish,  and  put  in  execution,  such  by-laws,  and  ordinances, 
and  regulations,  as  they  shall  deem  necessary  and  convenient  for  the  government  of  the  said 
corporation,  not  being  contrary  to  the  Constitution  thereof,  or  to  the  laws  of  the  United  States; 
and  generally  to  do  and  execute  all  and  singular  the  acts,  matters,  and  things,  which  to  them 
it  shall  or  may  appertain  to  do;  subject,  nevertheless,  to  the  rules,  regulations,  restrictions, 
limitations,  and  provisions,  hereinafter  prescribed  and  declared. 

Sec.  8.  And  be  it  further  enacted.  That  for  the  management  of  the  affairs  of  the  said  cor- 
poration, there  shall  be  twenty-five  directors,  five  of  whom,  being  stockholders,  shall  be  annually 
appointed  by  the  President  of  the  United  States,  by  and  with  the  advice  and  consent  of  the 
Senate,  not  more  than  three  of  whom  shall  be  residents  of  any  one  state;  and  twenty  of  whom 
shall  be  annually  elected  at  the  banking  house  in  the  city  of  Philadelphia,  on  the  first  Monday 
of  January,  in  each  year,  by  the  qualified  stockholders  of  the  capital  of  the  said  bank,  other 
than  the  United  States,  and  by  a  plurality  of  votes  then  and  there  actually  given,  according  to 
the  scale  of  voting  hereinafter  prescribed:  Provided  always.  That  no  person,  being  a  director 
in  the  bank  of  the  United  States,  or  any  of  its  branches,  shall  be  a  director  in  any  other  bank; 
and  should  any  such  director  act  as  a  director  in  any  other  bank,  it  shall  forthwith  vacate  his 
appointment  in  the  direction  of  the  bank  of  the  United  States.  And  the  directors,  so  duly 
appointed  and  elected,  shall  be  capable  of  serving,  by  virtue  of  such  appointment  and  choice, 
from  the  first  Monday  in  the  month  of  January  of  each  year,  imtil  the  end  and  expiration  of  the 
first  Monday  in  the  month  of  January  of  the  year  next  ensuing  the  time  of  each  annual  election 
to  be  held  by  the  stockholders  as  aforesaid.  And  the  board  of  directors,  annually,  at  the  first 
meeting  after  their  election  in  each  and  every  year,  shall  proceed  to  elect  one  of  the  directors 
to  be  president  of  the  corporation,  who  shall  hold  the  said  office  during  the  same  period  for  which 
the  directors  are  appointed  and  elected  as  aforesaid:  Provided  also.  That  the  first  appointment 
and  election  of  the  directors  and  president  of  the  said  bank  shall  be  at  the  time  and  for  the 
period  hereinafter  declared:  And  provided  also.  That  in  case  it  should  at  any  time  happen  that 
an  appointment  or  election  of  directors,  or  an  election  of  the  president  of  the  said  bank,  should 
not  be  so  made  as  to  take  effect  on  any  day  when,  in  pursuance  of  this  act,  they  ought  to  take 
effect,  the  said  corporation  shall  not,  for  that  cause,  be  deemed  to  be  dissolved;  but  it  shall 
be  lawful  at  any  other  time  to  make  such  appointments,  and  to  hold  such  elections,  (as  the 
case  may  be,)  and  the  manner  of  holding  the  elections  shall  be  regulated  by  the  by-laws  and 
ordinances  of  the  said  corporation;  and  until  such  appointments  or  elections  be  made,  the  di- 
rectors and  president  of  the  said  bank,  for  the  time  being,  shall  continue  in  office:  And  provided 
also,  That  in  case  of  the  death,  resignation,  or  removal  of  the  president  of  the  said  corporation, 
the  directors  shall  proceed  to  elect  another  president  from  the  directors  as  aforesaid:  and  in 
case  of  the  death,  resignation,  or  absence,  from  the  United  States,  or  removal  of  a  director  from 
office,  the  vacancy  shall  be  supplied  by  the  President  of  the  United  States,  or  by  the  stock- 
holders, as  the  case  may  be.  But  the  President  of  the  United  States  alone  shall  have  power 
to  remove  any  of  the  directors  appointed  by  him  as  aforesaid. 
Manner    and  Sec.  9.  And  be  it  further  enacted.  That  as  soon  as  the  sum  of  eight  millions  four  hundred 

time  of  the  banks  thousand  dollars  in  gold  and  silver  coin,  and  in  the  public  debt,  shall  have  been  actually  received 
going  into  opera-  on  account  of  the  subscriptions  to  the  capital  of  the  said  bank  (exclusively  of  the  subscription 
tion,  etc.  aforesaid,  on  the  part  of  the  United  States)  notice  thereof  shall  be  given  by  the  persons  under 


Twenty-five 
directors;  five  to  be 
appointed  by  the 
president,  etc. 


Regulations 
concerning  the  di- 
rection of  the  bank, 
etc. 


23 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


The  directors 
empowered  to  ap- 
point officers, 
clerks,  servants,  etc. 


Fundamental 
articles,  etc. 


Rules  concern- 
ing voting  for  di- 
rectors. 


A  part  of  the 
directors  ap- 
pointed by  the 
stockholders  and 
president,  alone 
eligible  a  second 
year  successively. 
President  always 
eligible. 

Stockholders, 
citizens,  may  be 
only  appointed  di- 
rectors. Directors 
to  have  no  com- 
pensation, other 
than  the  president. 

Seven  directors, 
including  the  pres- 
ident may  consti- 
tute a  board. 

How  his  place  is 
supplied  in  case  of 
absence  or  sickness. 

General  meeting 
of  the  stockholders 
— how  to  be  called. 

Cashier  to  give 
bonds  and  secu- 
rity. 

Limitation  con- 
cerning,and  a  des- 
cription of  the  real 


whose  superintendence  the  subscriptions  shall  have  been  made  at  the  city  of  Philadelphia,  in 
at  least  two  newspapers  printed  in  each  of  the  places,  (if  so  many  be  printed  in  such  places, 
respectively,)  where  subscriptions  shall  have  been  made,  and  the  said  persons  shall,  at  the 
same  tirne,  and  in  like  manner,  notify  a  time  and  place  within  the  said  city  of  Philadelphia, 
at  the  distance  of  at  least  thirty  days  from  the  time  of  such  notification,  for  proceeding  to  the 
election  of  twenty  directors  as  aforesaid,  and  it  shall  be  lawful  for  such  election  to  be  then  and 
there  made.  And  the  President  of  the  United  States  is  hereby  authorized,  during  the  present 
session  of  Congress,  to  nominate,  and,  by  and  with  the  advice  and  consent  of  the  Senate,  to 
appoint,  five  directors  of  the  said  bank,  though  not  stockholders,  anything  in  the  provisions 
of  this  act  to  the  contrary  notwithstanding;  and  the  persons  who  shall  be  elected  and  appointed 
as  aforesaid,  shall  be  the  first  directors  of  the  said  bank,  and  shall  proceed  to  elect  one  of  the 
directors  to  be  President  of  the  said  bank;  and  the  directors  and  president  of  the  said  bank 
so  appointed  and  elected  as  aforesaid,  shall  be  capable  of  serving  in  their  respective  office,  by 
virtue  thereof,  until  the  end  and  expiration  of  the  first  Monday  of  the  month  of  January  next 
ensuing  the  said  appointments  and  elections;  and  they  shall  then  and  thenceforth  commence, 
and  continue  the  operations  of  the  said  bank,  at  the  city  of  Philadelphia. 

Sec.  _io.  And  be  it  further  enacted.  That  the  directors,  for  the  time  being  shall  have  power 
to  appoint  such  officers,  clerks,  and  servants,  under  them  as  shall  be  necessary  for  executing 
the  business  of  the  said  corporation,  and  to  allow  them  such  compensation  for  their  services, 
respectively,  as  shall  be  reasonable;  and  shall  be  capable  of  exercising  such  other  powers  and 
authorities  for  the  well  governing  and  ordering  of  the  officers  of  the  said  corporation,  as  shall 
be  prescribed,  fixed,  and  determined,  by  the  laws,  regulations,  and  ordinances  of  the  same. 

Sec.  II.  And  be  it  further  enacted.  That  the  following  rules,  restrictions,  limitations,  and 
provisions,  shall  form  and  be  fundamental  articles  of  the  constitution  of  the  said  corporation, 
to  wit: 

First.  The  number  of  votes  to  which  the  stockholders  shall  be  entitled,  in  voting  for  directors, 
shall  be  according  to  the  number  of  shares  he,  she,  or  they,  respectively,  shall  hold,  in  the 
proportion  following,  that  is  to  say;  for  one  share  and  not  more  than  two  shares,  one  vote; 
for  every  two  shares  above  two,  and  not  exceeding  ten,  one  vote;  for  every  four  shares  above 
ten,  and  not  exceeding  thirty,  one  vote;  for  every  six  shares  above  thirty,  and  not  exceeding 
sixty,  one  vote;  for  every  eight  shares  above  sixty,  and  not  exceeding  one  hundred,  one  vote; 
and  for  every  ten  shares  above  one  hundred,  one  vote;  but  no  person,  co-partnership,  or  body 
politic,  shall  be  entitled  to  a  greater  number  than  thirty  votes;  and  after  the  first  election,  no 
share  or  shares  shall  confer  a  right  of  voting,  which  shall  not  have  been  holden  three  calendar 
months  previous  to  the  day  of  election.  And  stockholders  actually  resident  within  the  United 
States,  and  none  other,  may  vote  in  elections  by  proxy. 

Second.  Not  more  than  three-fourths  of  the  directors  elected  by  the  stockholders,  and  not 
more  than  four-fifths  of  the  directors  appointed  by  the  President  of  the  United  States,  who 
shall  be  in  office  at  the  time  of  an  annual  election,  shall  be  elected  or  appointed  for  the  next 
succeeding  year;  and  no  director  shall  hold  his  office  more  than  three  years  out  of  four  in  suc- 
cession: but  the  director  who  shall  be  the  president  at  the  time  of  an  election  may  always  be 
re-appointed  or  re-elected,  as  the  case  may  be. 


Third.  None  but  a  stockholder,  resident  citizen  of  the  United  States,  shall  be  a  director; 
nor  shall  a  director  be  entitled  to  any  emoluments;  but  the  directors  may  make  such  compensa- 
tion to  the  president  for  his  extraordinary  attendance  at  the  bank,  as  shall  appear  to  them 
reasonable. 


Fourth.  Not  less  than  seven  directors  shall  constitute  a  board  for  the  transaction  of  business, 
of  whom  the  president  shall  always  be  one,  except  in  case  of  sickness  or  necessary  absence:  m 
which  case  his  place  may  be  supplied  by  any  other  director  whom  he,  by  writing,  under  his 
hand,  shall  depute  for  that  purpose.  And  the  director  so  deputed  may  do  and  transact  all  the 
necessary  business,  belonging  to  the  office  of  the  president  of  the  said  corporation,  during  the 
continuance  of  the  sickness  or  necessary  absence  of  the  president. 

Fifth.  A  number  of  stockholders,  not  less  than  sixty,  who,  together,  shall  be  proprietors  of 
one  thousand  shares  or  upwards,  shall  have  power  at  any  time  to  call  a  general  meeting  of 
the  stockholders  for  purposes  relative  to  the  institution,  giving  at  least  ten  weeks'  notice  in 
two  public  newspapers  of  the  place  where  the  bank  is  seated,  and  specifying  in  such  notice  the 
object  or  objects  of  such  meeting. 

Sixth.  Each  cashier  or  treasurer,  before  he  enters  upon  the  duties  of  his  office,  shall  be  re- 
quired to  give  bond,  with  two  or  more  sureties,  to  the  satisfaction  of  the  directors,  in  a  sum 
not  less  than  fifty  thousand  dollars,  with  a  condition  for  his  good  behaviour  and  the  faithful 
performance  of  his  duties  to  the  corporation. 

Seventh.  The  lands,  tenements,  and  hereditaments,  which  it  shall  be  lawful  for  the  said 
corporation  to  hold,  shall  be  only  such  as  shall  be  requisite  for  its  immediate  accommodation 
in  relation  to  the  convenient  transacting  of  its  business,  and  such  as  shall  have  been  bona  fide 


24 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


estate  which  may 
be  held  by  the  cor- 
poration. 

Maximum  of 
debts  which  the 
corporation  may 
at  one  time  con- 
tract. 

Remedy  against 
the  directors  under 
whose  adminis- 
tration an  excess 
of  debt  shall  be 
created. 

Directors  absent 
or  dissenting  ex- 
empted. 


In  what  the  cor- 
poration may 
transact  business 
and  trade. 

Loans  exceeding 
certain  sums  not 
to  be  made  the 
United  States  or 
particular  states, 
or  foreign  states, 
but  by  acts  of  Con- 
gress. 

Rules  to  be  pre- 
scribed for  making 
the  stock  assign- 
able. 

The  bills,  obli- 
gatory and  of  cred- 
it, under  the  seal 
of  the  corporation; 
how  assignable. 

Proviso. 


Proviso. 


Half  yearly  di- 
vidends to  be  made. 

A  statement  of 
the  a_ffairs  of  the 
company  to  be  laid 
before  the  stock- 
holders. 

Delinquent  sub- 
scribers to  lose  the 
benefit  of  divi- 
dends. 


mortgaged  to  it  by  way  of  security,  or  conveyed  to  it  in  satisfaction  of  debts  previously  con- 
tracted in  the  course  of  its  dealings,  or  purchased  at  sales,  upon  judgments  which  shall  have 
been  obtained  for  such  debts. 

Eighth.  The  total  amount  of  debts  which  the  said  corporation  shall  at  any  time  owe, 
whether  by  bond,  bill,  note,  or  other  contract,  over  and  above  the  debt  or  debts  due  for  money 
deposited  in  the  bank,  shall  not  exceed  the  sum  of  thirty-five  millions  of  dollars,  unless  the 
contracting  of  any  greater  debt  shall  have  been  previously  authorized  by  law  of  the  United 
States.  Tn  case  of  excess,  the  directors  under  whose  administration  it  shall  happen,  shall  be 
liable  for  the  same  in  their  natural  and  private  capacities:  and  an  action  of  debt  may  in  such 
case  be  brought  against  them,  or  any  of  them,  their  or  any  of  their  heirs,  executors,  or  admin- 
istrators, in  any  court  of  record  of  the  United  States,  or  either  of  them,  by  any  creditor  or 
creditors  of  the  said  corporation,  and  may  be  prosecuted  to  judgment  and  execution,  any 
condition,  covenant,  or  agreement,  to  the  contrary  notwithstanding.  But  this  provision  shall 
not  be  construed  to  exempt  the  said  corporation  or  the  lands,  tenements,  goods,  or  chattels  of 
the  same  from  being  also  liable  for,  and  chargeable  with,  the  said  excess. 

Such  of  the  said  directors,  who  may  have  been  absent  when  the  said  excess  was  contracted 
or  created,  or  who  may  have  dissented  from  the  resolution  or  act  whereby  the  same  was  so 
contracted  or  created,  may  respectively  exonerate  themselves  from  being  so  liable,  by  forth- 
with giving  notice  of  the  fact,  and  of  their  absence  or  dissent,  to  the  President  of  the  United 
States,  and  to  the  stockholders,  at  a  general  meeting,  which  they  shall  have  power  to  call  for 
the  purpose. 

ISiinth.  The  said  corporation  shall  not,  directly  or  indirectly,  deal  or  trade  in  anything 
except  bills  of  exchange,  gold  or  silver  bullion,  or  in  the  sale  of  goods  really  and  truly  pledged 
for  money  lent  and  not  redeemed  in  due  time,  or  goods  which  shall  be  the  proceeds  of  its  lands. 
It  shall  not  be  at  liberty  to  purchase  any  public  debt  whatsoever,  nor  shall  it  take  more  than 
at  the  rate  of  six  per  centum  per  annum  for  or  upon  its  loans  or  discounts. 

Tenth.  No  loan  shall  be  made  by  the  said  corporation,  for  the  use  or  on  account  of  the 
Government  of  the  United  States,  to  an  amount  exceeding  five  hundred  thousand  dollars,  or 
of  any  particular  state  to  an  amount  exceeding  fifty  thousand  dollars,  or  of  any  foreign  prince 
or  state,  unless  previously  authorized  by  a  law  of  the  United  States. 


Eleventh.  The  stock  of  the  said  corporation  shall  be  assignable  and  transferable,  according 
to  such  rules  as  shall  be  instituted  in  that  behalf,  by  the  laws  and  ordinances  of  the  same. 

Twelfth.  The  bills,  obligatory  and  of  credit,  under  the  seal  of  the  said  corporation,  which  shall 
be  made  to  any  person  or  persons  shall  be  assignable  by  endorsement  thereupon,  under  the  hand 
or  hands  of  such  person  or  persons,  and  his,  her,  or  their  executors  or  administrators,  and  his, 
her,  or  their  assignee  or  assignees,  and  so  as  absolutely  to  transfer  and  vest  the  property  thereof 
in  each  and  every  assignee  or  assignees  successively,  and  to  enable  such  assignee  or  assignees, 
and  his,  her,  or  their  executors  or  administrators,  to  maintain  an  action  thereupon  in  his,  her, 
or  their  own  name  or  names:  Provided,  That  said  corporation  shall  not  make  any  bill,  obli- 
gatory, or  of  credit,  or  other  obligation  under  its  seal  for  the  payment  of  a  sum  less  than  five 
thousand  dollars.  And  the  bills  or  notes  which  may  be  issued  by  order  of  the  said  corporations 
signed  by  the  president,  and  countersigned  by  the  principal  cashier  or  treasurer  thereof,  promis- 
ing the  payment  of  money  to  any  person  or  persons,  his,  her,  or  their  order,  or  to  bearer, 
although  not  under  the  seal  of  the  said  corporation,  shall  be  binding  and  obligatory  upon  the 
same,  in  like  manner,  and  with  like  force  and  effect,  as  upon  any  private  person  or  persons, 
if  issued  by  him,  her  or  them,  in  his,  her  or  their  private  or  natural  capacity  or  capacities,  and 
shall  be  assignable  and  negotiable  in  like  manner  as  if  they  were  so  issued  by  such  private 
person  or  persons;  that  is  to  say,  those  which  shall  be  payable  to  any  person  or  persons,  his, 
her  or  their  order,  shall  be  assignable  by  endorsement,  in  like  manner  and  with  the  like  eflfect 
as  foreign  bills  of  exchange  now  are;  and  those  which  are  payable  to  bearer  shall  be  assignable 
and  negotiable  by  delivery  only:  Provided,  That  all  bills  or  notes,  so  to  be  issued  by  said  cor- 
poration, shall  be  made  payable  on  demand,  other  than  bills  or  notes  for  the  payment  of  a  sum 
not  less  than  one  hundred  dollars  each,  and  payable  to  the  order  of  some  person  or  persons, 
which  bills  or  notes  it  shall  be  lawful  for  said  corporation  to  make  payable  at  any  time  not 
exceeding  sixty  days  from  the  date  thereof. 

Thirteenth.  Half  yearly  dividends  shall  be  made  of  so  much  of  the  profits  of  the  bank  as 
shall  appear  to  the  directors  advisable;  and  once  in  every  three  years  the  directors  shall  lay 
before  the  stockholders,  at  a  general  meeting,  for  their  information,  an  exact  and  particular 
statement  of  the  debts  which  shall  have  remained  unpaid  after  the  expiration  of  the  original 
credit,  for  a  period  of  treble  the  term  of  that  credit,  and  of  the  surplus  of  the  profits,  if  any, 
after  deducting  losses  and  dividends.  If  there  shall  be  a  failure  in  the  payment  of  any  part 
of  any  sum  subscribed  to  the  capital  of  the  said  bank  by  any  person,  co-partnership,  or  body 
politic,  the  party  failing  shall  lose  the  benefit  of  any  dividend  which  may  have  accrued  prior 
to  the  time  for  making  such  payment,  and  during  the  delay  of  the  same. 

Fourteenth.  The  directors  of  the  said  corporation  shall  establish  a  competent  ofiice  of  dis- 
count and  deposit  in  the  District  of  Columbia  whenever  any  law  of  the  United  States  shall 


25 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


Offices  to  he  es- 
tablished in  the 
District  of  Colum- 
bia and  the  several 
states  when  au- 
thorized and  re- 
quired by  law. 

Proviso. 


Secretary  of  the 
Treasury  author- 
ized to  call  upon 
the  bank  for  a 
statement  not  ex- 
ceeding a  weekly 
one,  of  its  concerns. 
Proviso. 

No  stockholder 
but  a  citizen  of  the 
United  States  may 
vote  in  choice  of 
directors. 

No  smaller  notes 
than  five  dollars 
to  be  issued. 

Penalties  for 
dealing  in  a  way 
or  in  articles  in- 
terdicted. 


Penalties  for 
making  unlawful 
loans  to  the  United 
States  or  particu- 
lar states  or  to  for- 
eign governments. 


Notes  of  the 
bank  receivable  in 
payments  of  all 
dues  to  United 
States,  until,  etc. 

Repealed,  1836, 
ch.  gy. 

The  bank  to 
give  the  necessary 
facilities  without 
any  charge,  for 
transferring  the 
funds  of  the 
United  States  to 
di^erent  quarters. 


require  such  an  establishment;  also  one  such  office  of  discount  and  deposit  in  any  state  in  which 
two  thousand  shares  shall  have  been  subscribed  or  may  be  held,  whenever,  upon  application 
of  the  legislature  of  such  state,  Congress  may  by  law  require  the  same:  Provided,  the  directors 
aforesaid  shall  not  be  bound  to  establish  such  office  before  the  whole  of  the  capital  of  the  bank 
shall  have  been  paid  up.  And  it  shall  be  lawful  for  the  directors  of  the  said  corporation  to 
establish  offices  of  discount  and  deposit,  wheresoever  they  shall  think  fit,  within  the  United 
States  or  the  territories  thereof,  and  to  commit  the  management  of  the  said  offices,  and  the 
business  thereof,  respectively,  to  such  persons  and  under  such  regulations  as  they  shall  deem 
proper,  not  being  contrary  to  law  or  the  constitution  of  the  bank.  Or  instead  of  establishing 
such  offices,  it  shall  be  lawful  for  the  directors  of  the  said  corporation,  from  time  to  time,  to 
employ  any  other  bank  or  banks,  to  be  first  approved  by  the  Secretary  of  the  Treasury,  at 
any  place  or  places  that  they  may  deem  safe  and  proper,  to  manage  and  transact  the  business 
proposed  as  aforesaid,  other  than  for  the  purposes  of  discount,  to  be  managed  and  transacted 
by  such  offices,  under  such  agreements,  and  subject  to  such  regulations,  as  they  shall  deem 
just  and  proper.  Not  more  than  thirteen  nor  less  than  seven  managers  or  directors,  of  every 
office  established  as  aforesaid,  shall  be  annually  appointed  by  the  directors  of  the  bank  to 
serve  one  year;  they  shall  choose  a  president  from  their  own  number;  each  of  them  shall  be 
a  citizen  of  the  United  States,  and  a  resident  of  the  state,  territory,  or  district  wherein  such 
office  is  established;  and  not  more  than  three-fourths  of  the  said  managers  or  directors,  in 
office  at  the  time  of  an  annual  appointment,  shall  be  re-appointed  for  the  next  succeeding 
year;  and  no  director  shall  hold  his  office  more  than  three  years  out  of  four,  in  succession;  but 
the  president  may  be  always  re-appointed. 

Fifteenth.  The  officer  at  the  head  of  the  Treasury  Department  of  the  United  States  shall 
be  furnished,  from  time  to  time,  as  often  as  he  may  require,  not  exceeding  once  a  week,  with 
statements  of  the  amount  of  the  capital  stock  of  the  said  corporation  and  of  the  debts  due  to 
the  same;  of  the  moneys  deposited  therein;  of  the  notes  in  circulation,  and  of  the  specie  in 
hand;  and  shall  have  a  right  to  inspect  such  general  accounts  in  the  books  of  the  bank  as  shall 
relate  to  the  said  statement:  Provided,  That  this  shall  not  be  construed  to  imply  a  right  of 
inspecting  the  account  of  any  private  individual  or  individuals  with  the  bank. 

Sixteenth.  No  stockholder,  unless  he  be  a  citizen  of  the  United  States,  shall  vote  in  the 
choice  of  directors. 


Seventeenth.    No  note  shall  be  issued  of  less  amount  than  five  dollars. 


Sec.  12.  And  be  it  further  enacted,  That  if  the  said  corporation,  or  any  person  or  persons, 
for  or  to  the  use  of  the  same,  shall  deal  or  trade  in  buying  or  selling  goods,  wares,  merchandise, 
or  commodities  whatsoever,  contrary  to  the  provisions  of  this  act,  all  and  every  person  and 
persons  by  whom  any  order  or  direction  for  so  dealing  or  trading  shall  have  been  given;  and  all 
and  every  person  and  persons  who  shall  have  been  concerned  as  parties  or  agents  therein,  shall 
forfeit  and  lose  treble  the  value  of  the  goods,  wares,  merchandise  and  commodities  in  which 
such  dealing  and  trade  shall  have  been,  one  half  thereof  to  the  use  of  the  informer,  and  the 
other  half  thereof,  to  the  use  of  the  United  States,  to  be  recovered  in  any  action  of  law  with 
costs  of  suit. 

Sec.  13.  And  be  it  further  enacted,  That  if  the  said  corporation  shall  advance  or  lend  any 
sum  of  money  for  the  use  or  on  account  of  the  Government  of  the  United  States,  to  an  amount 
exceeding  five  hundred  thousand  dollars;  or  of  any  particular  state,  to  an  amount  exceeding 
fifty  thousand  dollars;  or  of  any  foreign  prince  or  state,  (unless  previously  authorized  thereto 
by  a  law  of  the  United  States),  all  and  every  person  and  persons,  by  and  with  whose  order 
agreement,  consent,  approbation  and  connivance  such  unlawful  advance  or  loan  shall  have  been 
made,  upon  conviction  thereof  shall  forfeit  and  pay,  for  every  such  offence,  treble  the  value  or 
amount  of  the  sum  or  sums  which  have  been  so  unlawfully  advanced  or  lent;  one-fifth  thereof 
to  the  use  of  the  informer,  and  the  residue  thereof  to  the  use  of  the  United  States. 

Sec.  14.  And  be  it  further  enacted.  That  the  bills  or  notes  of  the  said  corporation^  originally 
made  payable,  or  which  shall  have  become  payable  on  demand,  shall  be  receivable  in  all  pay- 
ments to  the  United  States,  unless  otherwise  directed  by  act  of  Congress. 

Sec.  15.  And  be  it  further  enacted.  That  during  the  continuance  of  this  act,  and  whenever 
required  by  the  Secretary  of  the  Treasury,  the  said  corporation  shall  give  the  necessary  facilities 
for  transferring  the  public  funds  from  place  to  place,  within  the  United  States,  or  the  territories 
thereof,  and  for  distributing  the  same  in  payment  of  the  public  creditors,  without  charging 
commissions  or  claiming  allowance  on  account  of  difference  of  exchange,  and  shall  also  do  and 
perform  the  several  and  respective  duties  of  the  commissioners  of  loans  for  the  several  states, 
or  of  any  one  or  more  of  them,  whenever  required  by  law. 


26 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


Deposits  of  the 
public  moneys  to 
be  made  in  the 
bank  or  its 
branches,  or  the 
reasons  to  be  laid 
before  Congress  by 
the  Secretary  of 
the  Treasury  for 
its  not  being  done. 

Corporation 
prohibited  from 
suspending  pay- 
ments in  specie, 
by  being  made 
chargeable  with 
the  payment  of 
interest  at  the  rate 
of  12  per  centum 
per  annum. 

Proviso. 


Penalties  for 
forging,  counter- 
feiting, etc. 


Proviso. 


For  engraving 
after  the  simili- 
tude of  the  plates 
used  for  the  bank, 
any  plates,  etc. 


Punishment. 


Bonus  to  be 
paid  to  the 
United  States  for 
this  Charter. 


Sec.  i6.  And  be  it  further  enacted,  That  the  deposits  of  the  money  of  the  United  States,  in 
places  in  which  the  said  bank  and  branches  thereof  may  be  established,  shall  be  made  in  said 
bank  or  branches  thereof,  unless  the  Secretary  of  the  Treasury  shall  at  any  time  otherwise 
order  and  direct;  in  which  case  the  Secretary  of  the  Treasury  shall  immediately  lay  before 
Congress,  if  in  session,  and  if  not,  immediately  after  the  commencement  of  the  next  session,  the 
reasons  of  such  order  or  direction. 


Sec.  17.  And  be  it  further  enacted.  That  the  said  corporation  shall  not  at  any  time  suspend 
or  refuse  payment  in  gold  and  silver,  of  any  of  its  notes,  bills  or  obligations;  nor  of  any  moneys 
received  upon  deposit  in  said  bank,  or  in  any  of  its  offices  of  discount  and  deposit.  And  if  the 
said  corporation  shall  at  any  time  refuse  or  neglect  to  pay  on  demand  any  bill,  note  or  obliga- 
tion issued  by  the  corporation,  according  to  the  contract,  promise  or  undertaking  therein  ex- 
pressed; or  shall  neglect  or  refuse  to  pay  on  demand  any  moneys  received  in  said  bank,  or  in 
any  of  its  offices  aforesaid,  on  deposit,  to  the  person  or  persons  entitled  to  receive  the  same, 
then,  and  in  every  such  case,  the  holder  of  any  such  note,  bill,  or  obligation,  or  the  person  or 
persons  entitled  to  demand  and  receive  such  moneys  as  aforesaid,  shall,  respectively  be  entitled 
to  receive  and  recover  interest  on  the  said  bills,  notes,  obligations  or  moneys  until  the  same 
shall  be  fully  paid  and  satisfied,  at  the  rate  of  twelve  per  centum  per  annum  from  the  time  of 
such  demand  as  aforesaid;  Provided,  That  Congress  may  at  any  time  hereafter  enact  laws 
enforcing  and  regulating  the  recovery  of  the  amount  of  the  notes,  bills,  obligations  or  other 
debts,  of  which  payment  shall  have  been  refused  as  aforesaid,  with  the  rate  of  interest  above 
mentioned,  vesting  jurisdiction  for  that  purpose  in  any  courts,  either  of  law  or  equity,  of  the 
courts  of  the  United  States,  or  territories  thereof,  or  of  the  several  states,  as  they  may  deem 
expedient. 

Sec.  18.  And  be  it  further  enacted.  That  if  any  person  shall  falsely  make,  forge,  or  counterfeit, 
or  cause  or  procure  to  be  falsely  made,  forged  or  counterfeited,  or  willingly  aid  or  assist  in  falsely 
making,  forging  or  counterfeiting,  any  bill  or  note  in  imitation  of  or  purporting  to  be  a  bill  or 
note  issued  by  order  of  the  president,  directors,  and  company  of  the  said  bank,  or  of  any  order 
or  check  on  the  said  bank  or  corporation,  or  any  cashier  thereof;  or  shall  falsely  alter,  or  cause 
or  procure  to  be  falsely  altered,  or  willingly  aid  or  assist  in  falsely  altering  any  bill  or  note  issued 
by  order  of  the  president,  directors,  and  company  of  the  said  bank,  or  any  order  or  check  on  the 
said  bank  or  corporation,  or  any  cashier  thereof;  or  shall  pass,  utter  or  publish,  or  attempt  to 
pass,  utter  or  publish  as  true  any  false,  forged,  or  counterfeited  bill  or  note  purporting  to  be  a 
bill  or  note  issued  by  order  of  the  president,  directors  and  company  of  the  said  bank,  or  any  false, 
forged  or  counterfeited  order  or  check  upon  the  said  bank  or  corporation,  or  any  cashier  thereof, 
knowing  the  same  to  be  falsely  forged  or  counterfeited;  or  shall  pass,  utter  or  publish,  or  attempt 
to  pass,  utter  or  publish  as  true,  any  falsely  altered  bill  or  note  issued  by  order  of  president, 
directors  and  company  of  the  said  bank,  or  any  falsely  altered  order  or  check  on  the  said  bank 
or  corporation,  or  any  cashier  thereof,  knowing  the  same  to  be  falsely  altered  with  intention  to 
defraud  the  said  corporation  or  any  other  body  politic  or  person;  or  shall  sell,  utter  or  deliver, 
or  cause  to  be  sold,  uttered  or  delivered,  any  forged  or  counterfeited  note  or  bill  in  imitation,  or 
purporting  to  be  a  bill  or  note  issued  by  order  of  the  president  and  directors  of  the  said  bank, 
knowing  the  same  to  be  false,  forged,  or  counterfeited  every  such  person  shall  be  deemed  and 
adjudged  guilty  of  felony,  and  being  thereof  convicted  by  due  course  of  law  shall  be  sentenced 
to  be  imprisoned  and  kept  to  hard  labour  for  not  less  than  three  years,  nor  more  than  ten  years, 
or  shall  be  imprisoned  not  exceeding  ten  years,  and  fined  not  exceeding  five  thousand  dollars: 
Provided,  That  nothing  herein  contained  shall  be  construed  to  deprive  the  courts  of  the  individual 
states,  of  a  jurisdiction  under  the  laws  of  the  several  states,  over  any  offence  declared  punish- 
able by  this  act. 

Sec.  19.  And  be  it  further  enacted.  That  if  any  person  shall  make  or  engrave,  or  cause,  or 
procure  to  be  made  or  engraved,  or  shall  have  in  his  custody  or  possession,  any  metallic  plate, 
engraved  after  the  similitude  of  any  plate  from  which  any  notes  or  bills  issued  by  the  said  cor- 
poration shall  have  been  printed,  with  intent  to  use  such  plate,  or  to  cause,  or  suffer  the  same 
to  be  used,  in  forging  or  counterfeiting  any  of  the  notes  or  bills  issued  by  the  said  corporation; 
or  shall  have  in  his  custody  or  possession,  any  blank  note  or  notes,  bill  or  bills,  engraved  and 
printed  after  the  similitude  of  any  notes  or  bills  issued  by  the  said  corporation,  with  intent  to 
use  such  blanks,  or  cause,  or  suffer  the  same  to  be  used,  in  forging  or  counterfeiting  any  of  the 
notes  or  bills  issued  by  the  said  corporation;  or  shall  have  in  his  custody  or  possession  any  paper 
adapted  to  the  making  of  bank  notes  or  bills,  and  similar  to  the  paper  upon  which  any  notes  or 
bills  of  the  said  corporation  shall  have  been  issued,  with  intent  to  use  such  paper,  or  cause,  or 
suffer  the  same  to  be  used,  in  forging  or  counterfeiting  any  of  the  notes  or  bills  issued  by  the 
said  corporation,  every  such  person,  being  thereof  convicted,  by  due  course  of  law,  shall  be 
sentenced  to  be  imprisoned,  and  kept  to  hard  labour,  for  a  term  not  exceeding  five  years,  or 
shall  be  imprisoned  for  a  term  not  exceeding  five  years  and  fined  in  a  sum  not  exceeding  one 
thousand  dollars. 

Sec.  20.  And  be  it  further  enacted.  That  in  consideration  of  the  exclusive  privileges  and 
benefits  conferred  by  this  act,  upon  the  said  bank,  the  president,  directors,  and  company  there- 
of, shall  pay  to  the  United  States,  out  of  the  corporate  funds  thereof,  the  sum  of  one  million  and 
five  hundred  thousand  dollars,  in  three  equal  payments;   that  is  to  say:  five  hundred  thousand 


27 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


Congress  to  es- 
tablish no  other 
bank  except  in 
the  District  of 
Columbia. 

Authority  to  use 
the  name  of  the 
corporation,  etc., 
for  two  years  after 
the  charter  shall 
expire. 

Limitation  of 
time  prescribed  for 
the  bank  going  in- 
to operation. 

Committees  of 
either  House  of 
Congress  may  in- 
spect the  books, 
etc.,  of  the  bank. 

For  what  pur- 
pose. 


Proviso. 


dollars  at  the  expiration  of  two  years;  five  hundred  thousand  dollars  at  the  expiration  of  three 
years;  and  five  hundred  thousand  dollars  at  the  expiration  of  four  years  after  the  said  bank 
shall  be  organized,  and  commence  its  operations  in  the  manner  hereinbefore  provided. 

Sec.  21.  And  be  it  further  enacted,  That  no  other  bank  shall  be  established  by  any  future  law 
of  the  United  States  during  the  continuance  of  the  corporation  hereby  created,  for  which  the 
faith  of  the  United  States  is  hereby  pledged.  Provided,  Congress  may  renew  existing  charters 
for  banks  in  the  District  of  Columbia,  not  increasing  the  capital  thereof,  and  may  also  establish 
any  other  bank  or  banks  in  said  district,  with  capitals  not  exceeding,  in  the  whole,  six  millions 
of  dollars,  if  they  shall  deem  it  expedient.  And  notwithstanding  the  expiration  of  the  term  for 
which  the  said  corporation  is  created,  it  shall  be  lawful  to  use  the  corporate  name,  style,  and 
capacity,  for  the  purpose  of  suits  for  the  final  settlement  and  liquidation  of  the  affairs  and 
accounts  of  the  corporation,  and  for  the  sale  and  disposition  of  their  estate,  real,  personal, 
and  mixed:  but  not  for  any  other  purpose,  or  in  any  other  manner  whatsoever,  nor  for  a  pe- 
riod exceeding  two  years  after  the  expiration  of  the  said  term  of  incorp>oration. 

Sec.  2  2.  And  be  it  further  enacted.  That  if  the  subscriptions  and  payments  to  said  bank  shall 
not  be  made  and  completed  so  as  to  enable  the  same  to  commence  its  operations,  or  if  the  said 
bank  shall  not  commence  its  operations  on  or  before  the  first  Monday  in  April  next,  then,  and, 
in  that  case,  Congress  may,  at  any  time  within  twelve  months  thereafter,  declare,  by  law  this 
act  null  and  void. 

Sec.  23.  And  be  it  further  enacted.  That  it  shall,  at  all  times,  be  lawful  for  a  committee  of 
either  House  of  Congress,  appointed  for  that  purpose,  to  inspect  the  books,  and  to  examine  into 
the  proceedings  of  the  corporation  hereby  created,  and  to  report  whether  the  provisions  of  this 
charter  have  been,  by  the  same  violated  or  not;  and  whenever  any  committee,  as  aforesaid,  shall 
find  and  report,  or  the  President  of  the  United  States  shall  have  reason  to  believe  that  the  charter 
has  been  violated,  it  may  be  lawful  for  Congress  to  direct,  or  the  President  to  order,  a  scire  facias 
to  be  sued  out  of  the  circuit  court  of  the  district  of  Pennsylvania,  in  the  name  of  the  United 
States,  (which  shall  be  executed  upon  the  president  of  the  corporation  for  the  time  being,  at 
least  fifteen  days  before  the  commencement  of  the  term  of  said  court,)  calling  on  the  said  cor- 
poration to  show  cause  wherefore  the  charter  hereby  granted,  shall  not  be  declared  forfeited; 
and  it  shall  be  lawful  for  the  said  court,  upon  return  of  the  said  scire  facias,  to  examine  into 
the  truth  of  the  alleged  violation,  and  if  such  violation  be  made  appear,  then  to  pronounce  and 
adjudge  that  the  said  charter  is  forfeited  an  annulled.  Provided,  however,  Every  issue  of  fact 
which  may  be  joined  between  the  United  States  and  the  corporation  aforesaid,  shall  be  tried  by 
a  jury.  And  it  shall  be  lawful  for  the  court  aforesaid  to  require  the  production  of  such  of  the 
books  of  the  corporation  as  it  may  deem  necessary  for  the  ascertainment  of  the  controverted 
facts;  and  the  final  judgment  of  the  court  aforesaid,  shall  be  examinable  in  the  Supreme  Court, 
of  the  United  States  by  writ  of  error,  and  may  be  there  reversed  or  affirmed,  according  to  the 
usages  of  law. 

Approved,  April  10,  1816. 


28 


Great  Britain's  System 


Coin 

THE  British  coinage  system  is  unique 
among  civilized  countries  in  that  it  is 
the  only  one  absolutely  ignoring  the 
decimal  method  of  notation,  and  continues  in 
a  sense  the  ancient  practice  of  weight  designa- 
tions for  the  money-metals.  For  the  pound 
sterling  of  480  pence  retains  the  characteristic 
of  the  pound  Troy  of  480  penny- weights.  The 
fineness  of  its  gold  is  still  measured  by  carats, 
the  standard  being  22  carats  giving  the  rate 
.916  2-3. 

Originally  the  pound  was  Uterally  a  pound 
of  "steriing  silver,"  which  means  silver  .925 
pure.  The  value  was  reduced  from  time  to 
time  until  181 6,  when  it  was  fixed  at  £3 
6  shillings.  But  since  that  date  silver  has 
been  used  only  as  subsidiary,  gold  being  the 
sole  standard  coin. 

Gold  of  22  carats  fine  yields  £46  14  sh. 
6d.  to  the  Troy  pound,  making  the  ounce 
worth  77sh.  io3/^d.  The  sovereign,  as  the 
£  is  colloquially  called,  weighs  123.274  grains, 
of  which  1 13.001  grains  is  pure  gold;  the 
United  States  dollar  contains  23.22  grains 
of  pure  gold,  hence  the  £  is  equal  to  $4.8665. 
It  is  divided  into  20  shiUings  of  12  pence  each, 
the  latter  being  divided  into  4  farthings  each. 

The  law  provides  that  any  one  having  gold 
of  approximately  standard  fineness  may  take 
it  to  the  Mint  and  have  it  coined  free;  but 
as  this  involves  delay,  a  further  provision 
compels  the  Bank  of  England  to  buy  the 
gold  at  77sh.  9d.  or  i3^d.  below  the  Mint 
price.  This  creates  a  quick,  open  market 
for  gold,  and  London  has  become  the  chief 
center  for  the  buying  and  selling  of  the  yellow 
metal. 

Among  the  British  possessions  only  Aus- 
tralasia, South  Africa  and  a  few  small  islands, 
have  the  system  of  the  mother  country 
complete. 

The  stock  of  gold  in  Great  Britain  is 
estimated  at  about  $650,000,000  and  despite 
the  great  use  of  checks,  more  than  half  of 
the  gold  is  assumed  to  be  in  circulation.  The 
coin  and  currency  supply  works  out  a  per 
capita  of  $19.60. 

Paper  Currency 

The  paper  currency  consists  entirely  of 
bank-notes,  issued  in  England  and  Wales  by 
the  Bank  of  England,  in  Scotland  by  nine 
and  in  Ireland  by  six  local  banks.     (A  very 


small  amount  of  notes  of  other  English  banks 
are  still  used,  but  these  are  of  no  consequence). 
The  issue  system  provides,  since  1844,  for 
a  fixed  sum  upon  securities,  and  beyond  that 
only  pound  for  pound  for  gold  actually  re- 
ceived and  held;  hence  a  large  part  of  the 
issue  is  equivalent  to  gold  certificates.  No 
reserves  are  required  by  law  to  be  held  against 
notes,  and  only  those  of  the  Bank  of  England 
are  legal  tender,  but  in  England  and  Wales 
only. 

The  Bank  of  England  dominates  the  sys- 
tem, and  is  indeed  generally  regarded  as  the 
dominant  financial  institution  in  the  world. 
It  was  originally  chartered  in  1694,  with  a 
capital  of  £1,200,000  which  it  loaned  to  King 
WilUam  at  8%;  upon  the  public  debt  thus  due 
to  it  a  note-issue  was  based.  Capital  was 
increased  from  time  to  time,  chiefly  by 
lending  to  the  Government,  until  in  1816  the 
present  capital  of  £14,553,000  (about  $70,- 
800,000)  was  reached.  Notes  were  issued 
against  the  government  debt  and  also  on 
the  Bank's  own  credit.  Other  banks,  both 
chartered  and  private,  many  of  which  were 
estabUshed,  also  issued  notes  on  credit. 
There  were  no  reserve  laws,  and  the  country 
frequently  experienced  the  troubles  of  depre- 
ciated currency;  specie  payments  were  sus- 
pended continuously  from  1797  to  182 1, 
again  in  1825,  1826  and  1837. 

The  charter  was  originally  for  eleven  years; 
it  was  renewed  periodically  the  Government 
always  reserving  the  right  to  change  it  or 
repeat  it  at  ends  of  periods  on  a  year's  notice. 
It  was  in  1844  that  the  Government  revised 
the  banking  system  as  to  England  and  Wales, 
by  a  law  which  made  the  Bank  of  England  the 
dominant  factor.  It  was  given  the  monopoly 
of  currency -issuing  for  the  future;  it  was 
permitted  to  continue  the  note  issues  upon 
government  securities,  then  equal  to  the 
amount  of  its  capital,  and  to  increase  such 
issues  by  two-thirds  of  the  amount  of  issues 
which  the  other  banks  voluntarily  surren- 
dered; beyond  this  sum  issues  were  permitted 
only  upon  actual  deposit  of  coin  and  bullion, 
one-fifth  of  which  might  be  silver.  The  Bank 
was  required  to  keep  its  banking  business 
strictly  separate  from  its  note-issuing,  and  to 
report  its  status  briefly  each  week.  No 
reserve  requirements  were  imposed.  The  Bank 
is  not  subject  to  Government  examination. 

A  prior  law  had  prohibited  the  issue  of 
notes  under  £5  in  England  and  Wales,  and 
made  the  Bank's  notes  legal  tender  there, 


29 


THE    WORLD'S     PRINCIPAL    MONETARY    SYSTEMS 


except  in  payments  by  the  Bank,  but  only  if 
coin  redemption  was  continued.  Under  the 
operation  of  the  law  the  Bank's  notes  based 
on  securities  have  reached  £18,450,000;  other 
English  banks  have  still  out  about  £500,000. 

The  Bank  is  a  private  corporation,  none  of 
its  stock  being  owned  by  the  Government. 
Voting  is  limited  to  holders  of  £500  of  stock, 
but  no  stockholder  has  more  than  one  vote. 

The  Bank  is  the  treasurer  of  the  Govern- 
ment; the  other  banks  keep  deposit  accounts 
with  it,  and  it  rediscounts  their  commercial 
paper  when  they  need  cash;  it  fixes  the  dis- 
count rate  weekly  when  its  report  is  published 
(Thursdays)  and  by  reason  of  its  being  the 
depositary  of  the  other  banks  the  discount 
rate  governs  the  market,  in  large  measure. 

It  allows  no  interest  on  deposits,  but  will 
discount  paper  for  anyone  having  an  account 
with  it,  which  is  not  difficult  to  obtain. 

Branch  banking  is  highly  developed  through- 
out Great  Britain;  while  the  Bank  of  England 
has  only  11  branches  the  other  banks  have 
very  many,  aggregating  5,257  for  the  EngHsh 
ones  alone.  From  a  system  of  many  inde- 
pendent banks  there  has  developed  one  of 
44  large  ones,  and  the  concentration  still  goes 
on.     Ten  years  ago  there  were  77. 

All  the  banks  of  the  United  Kingdom  are 
required  to  report  semi-annually  to  a  depart- 
ment of  the  Government,  but  these  reports 
are  not  very  detailed.  Indeed  the  joint  stock 
banks  (as  they  are  called,)  carry  on  their 
business  quite  largely  without  much  restraint, 
excepting  the  usual  laws  governing  commer- 
cial transactions;  there  are  no  specific  laws 
relating  to  bank  supervision.  Hence  only  a 
few  of  them  report  their  reserve  cash;  and 
it  is  generally  assumed  that  they  hold  not 
more  than  about  5  per  cent,  of  gold  against 


their  deposits,  depending  upon  the  Bank  of 
England  for  help  in  time  of  need.  This 
condition  has  recently  led  to  an  agitation  for 
larger  gold  reserves. 

The  Bank  has  not  exercised  its  right  to  hold 
silver  in  its  note-fund  for  probably  half  a  cen- 
tury. 

SCOTLAND  has  a  system  of  its  own,  regu- 
lated by  a  law  of  1845;  the  Bank  of  Scotland 
is  the  leader  among  nine  issue  banks  which 
operate  1242  branches.  The  amount  of  notes 
permitted  to  be  issued  on  securities  was  fixed 
by  the  law  at  £2,676,350;  all  additional  issues 
must  be  covered  by  coin,  but  there  is  no  limit 
to  that  sum.  The  peculiar  credit-giving  sys- 
tem of  Scotland  obviates  the  need  for  large 
note-issues,  hence  the  limitation  upon  circula- 
tion is  not  onerous.  There  is  no  reserve  re- 
quirement. 

IRELAND  also  has  a  semi-independent  sys- 
tem created  by  the  law  of  1845;  the  Bank  of 
Ireland  is  the  chief  institution.  There  are  695 
branches.  The  banks  are  permitted  to  issue 
on  securities  £6,354,494  of  notes,  and  of  course 
without  limit  on  deposits  of  coin.  A  larger 
issue  on  securities  is  permitted  because  the 
credit  system  is  not  developed.  No  legal  re- 
serve provision  exists. 

Both  Scotch  and  Irish  banks  may  issue  notes 
as  low  as  £1;  the  notes  have  no  legal- tender 
power. 

Deposit  Currency 

As  already  intimated,  Great  Britain  uses 
checks  against  bank  deposits  very  extensively; 
in  no  other  country  has  the  check  system  been 
so  highly  developed.  The  statistical  table 
herewith  shows  the  volume  of  deposits  of  all 
the  banks  in  191 1.  An  estimate  of  the  coin 
reserves  against  them  is  also  given.     Since  the 


STATISTICS  OF  BRITISH  BANKS,  JUNE,   191 1 
(In  £,  GOGS  Omitted) 


Bank  of  England . .    

Other  English 86,891 

All  English 104,619 

Scotch 

Irish 

All  British 

*  Estimated. 


Capital, 
Surplus, 
Profits 

Net 
Circula- 
tion 

Deposits, 
Current 
Accounts 

Gold 

in 

Reserve 

Loans, 

Dis- 
counts 

AU 
Re- 
sources 

17,728 
86,891 

29,431 
207 

63,042 
761,482 

824,524 

106,633 

65,418 

40,438 
22,000* 

36,356 
492,813 

110,214 

894,351 

104,619 
18,748 
12,015 

29,638 
7,126 
7,114 

62,438 
6,000* 
3,600* 

529,169 
70,663 
45,812 

1,004,565 

137,833 
84,996 

135,382 

43,878 

996,575 

72,038 

645,644 

1,227,394 

3t 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


Bank  of  England  alone  is  required  to  publish 
actual  figures  of  the  coin  held,  the  amount  of 
gold  held  by  the  remainder  is  merely  a  close 
guess.  It  is  fair  to  say,  however,  that  the 
conservatism  of  the  bankers  prevents  undue 
inflation  as  a  rule;  the  exceptional  instances  are 
nevertheless  sufficient  to  disturb  the  whole 
structure,  when  they  occur.  The  advantage 
of  stability  is  easier  of  attainment  because  there 
are  so  few  individual  concerns  to  deal  with, 
viz. :  for  Great  Britain  entire  only  74  banking 
concerns,  with  7214  branches.  Hence  the  reg- 
ulation is  simple  and  in  addition  thereto,  every 
one  of  the  banks  is  managed  by  a  corps  of 
trained  men,  providing  the  most  careful  man- 
agement for  even  the  smallest  of  the  branches. 

It  should  be  said  here  that  the  other  banks 
reported  £250,000,000  of  "Cash  on  hand,  at 
bankers  and  at  call  on  short  notice;^'  the  bulk  of 
this  was  evidently  "on  call"  because  it  was 
not  in  other  banks  as  cash. 

The  aggregate  deposits  thus  figure  out  less 
than  $5,000,000,000. 

Calculating  the  gold  against  notes  and  de- 
posits combined,  the  reserve  ratio  is  about  7 
per  cent.  But  in  practice  no  one  considers  the 
ratio  except  that  of  the  Bank  of  England,  which 
was  upward  of  43  per  cent.  The  safety  line  is 
regarded  to  be  at  40  per  cent,  and  when  that  is 
reached  the  bank  begins  to  think  of  raising  its 
discount  rate. 

In  general  the  Bank's  rate  dominates  the 


discount  market;  but  there  are  qualifications 
to  that  statement.  Usually  the  open  market 
rate  is  below  the  Bank  rate,  which  is  its 
minimum.  Thus  in  191 1,  the  open  market 
was  continuously  below  at  one  time  a  full  i  per 
cent.  Yet  when  the  Bank  advanced  the  rate 
the  other  banks  quickly  followed  and  kept  very 
near  to  that  of  the  Bank.  While  the  Bank 
does  not  go  into  the  market  and  buy  bills,  it 
may  do  so.  Actually  the  same  purpose  is 
accomplished  by  permitting  individuals  to  open 
accounts  with  it  and  obtain  loans. 

The  real  point  to  be  considered  is  that  the 
Bank's  rate  in  three  years  fluctuated  between 
2^/^  per  cent,  and  5  per  cent,  and  was  changed 
twenty  times.  In  1909  it  was  at  2^  per  cent,  for 
189  days,  in  1910  it  was  at  3  per  cent,  for  147 
days,  in  191 1  at  3  per  cent,  for  196  days.  This 
is  far  from  the  stability  exhibited  by  the  Bank 
of  France,  although  perhaps  better  than  that 
of  any  other  country. 

Following  is  tlie  official  report  required  of 
the  Bank  weekly,  for  a  recent  date;  it  is  sub- 
mitted in  two  parts.  The  "consolidated 
statement"  is  appended  for  comparative  pur- 
poses. 

The  statement  being  for  January  3rd  shows 
a  small  reserve  ratio  because  of  the  expansion 
for  the  "annual  settlements;"  soon  thereafter 
the  liabilities  diminished  and  the  ratio  rose. 

It  is  interesting  to  note  that,  other  things 
equal,  the  reserve  ratio  calculated  in  the  man- 


BANK  OF  ENGLAND  RETURN,  JANUARY  3,  191 2 
Banking  Department  Issue  Department 


Liabilities 

Capital £i4,553,cxx) 

Rest  (Surplus,  &c.) 3,252,000 

Public  Deposits 16,677,000 

Other  Deposits 49,352,000 

Seven  Day  Bills,  &c 20,000 

Total £83,854,000 

Assets 

Government  Securities £15,270,000 

Other  Securities 44,902,000 

Notes 22,895,000 

Gold  and  Silver  Coin 787,000 

Total £83,854,000 

Notes  in  hands  of  public £29,190,000 

Reserve* 23,862,000 

Ratio  to  deposits 3S-^S% 


Liabilities 

Notes  Issued £52,085,000 

Assets 

Government  Debt 11,015,000 

Other  Securities 7,435,000 

Gold  Coin  and  Bullion 33.635.000 

Total £52,085,000 


Consolidated  Statement 

Deposit  Liability £66,019,000 

Net  Note  Liability 29,190,000 

Total £95,209,000 

Coin  Held £34,422,000 

Ratio  of  Coin 36.16% 


*  Notes  and  coin  in  banking  department. 


32 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


ner  shown  in  the  consolidated  statement,  rises 
as  note-issues  increase,  because  for  every  mil- 
lion of  notes  emitted  loo  per  cent,  in  coin 
must  be  deposited. 

The  issue  department  return  shows  that  on 
the  date  named  the  credit  notes  constituted 
nearly  36  per  cent,  of  the  total,  and  that  the 
gold  reserve  was  64.68  per  cent.  As  the  note- 
issue  increases  the  ratio  rises;  if  the  issue  were 
to  fall  to  £36,900,000  the  reserve  ratio  would 
be  exactly  50  per  cent. 

The  foregoing  review  indicates  that  Great 
Britain  passed  through  experiences  not  unlike 
our  own  early  in  the  last  century  and  was 
forced  to  find  a  remedy  in  the  central  bank 
plan.  While  the  one  adopted,  which  differs 
from  almost  all  the  others,  is  claimed  to  have 
served  admirably,  there  is  no  disguising  the 
fact  that  it  operates  defectively  at  critical 
periods.  Obviously  the  system  provides  for  no 
elasticity  in  note-issues;  an  unexpected  in- 
creased demand  for  currency  can  be  met  only 
by  importing  gold,  and  this  must  then  be  at 
additional  cost.  The  only  other  alternative  is 
for  the  Government  to  suspend  the  Bank  Act 
and  permit  note-issues  without  full  coin  cover. 
This  was  actually  done  on  three  occasions, 
1847,  1857,  1866,  when  crises  occurred.  The 
power  to  issue  notes  was  actually  availed  of 
only  in  1857  and  then  only  to  a  limited  extent. 
In  the  other  two  years  the  mere  fact  that  the 
power  existed  served  to  allay  fears,  which  in 


fact  constitute  an  important  part  of  the  trouble 
in  a  crisis. 

Upon  two  other  such  occasions  at  least  (1890 
and  1907),  the  Government  stood  ready  to 
suspend  the  Act,  but  assistance  was  obtained 
from  the  Bank  of  France,  which  rendered  the 
suspension  unnecessary.  This  suggests  that 
the  British  system  is  defective,  owing  to  its 
rigidity,  and  that  a  modification  would  prove 
desirable.  Many  bankers  there  believe,  how- 
ever, that  the  provision  of  larger  gold  reserves 
in  the  other  banks  would  meet  the  require- 
ments. 

The  fundamental  theory  of  the  system  is 
that  the  individual  banks  keep  balances  with 
the  Bank  of  England,  to  which  they  can  resort 
when  they  need  cash;  or  they  may  rediscount 
paper  with  the  Bank  to  obtain  cash;  that  when 
demands  for  such  cash  are  heavy,  compared 
with  the  supply,  the  Bank  will  discourage  the 
operation  by  raising  the  price  for  money,  i.  e., 
its  discount  rate.  This  has  the  effect  of  bring- 
ing gold  into  the  country  because  it  is  practi- 
cally offering  a  higher  price  for  the  metal  than 
other  countries  are  bidding.  But  when  cash 
is  badly  needed  this  operates  as  a  tax  upon 
business,  whereas  if  crecht-notes  could  be  issued 
the  discount  rate  would  not  have  to  be  raised. 
Still  the  policy  is  to  restrain  demands,  no  mat- 
ter what  the  conditions  may  be,  and  the  British 
public  appear  satisfied  with  it,  just  as  they  are 
with  their  duodecimal  coinage  system. 


The  French   System 


Coin 


THE  coinage  system  of  France,  which 
has  been  adopted  by  a  very  large  num- 
ber of  other  states,  is  decimal  as  to 
notation  and  founded  in  the  metric 
system  as  to  weight. 

During  the  period  prior  to  the  15th  century, 
when  the  country  consisted  of  numerous  prin- 
cipalities, various  money  systems  existed;  after 
the  consolidation  into  a  kingdom,  a  uniform 
system  was  established,  in  which  the  livre  or 
pound  was  the  important  element.  (This 
pound  was  not  the  same  as  the  British). 

Near  the  end  of  the  i8th  century  tht  franc 
became  the  unit,  and  by  a  law  of  1803  the 
present  system  was  finally  adopted.  It  was 
bi-metallic  with  silver  at  a  ratio  of  15^  to 
gold;  and  the  silver  5-franc  piece  is  today  still 
a  standard  coin  although  coinage  thereof  ceased 
in  1876.  Standard  coins  are  all  .900  fine;  sub- 
sidiary silver  is  only  .835  fine. 


The  chief  silver  coin  weighs  25  grammes,  or 
385.8  grains,  containing  347.22  grains  of  pure 
silver;  at  the  ratio  to  gold  this  gives  the  5-franc 
gold-piece  22.4  grains  of  pure  metal,  against 
23.22  grains  in  the  United  States  dollar;  the 
5-franc  piece  is  hence  valued  at  96.47  cents, 
which  gives  the  franc  a  rating  of  19.29  cts. 

The  metric  gramme  equals  15.432  grains;  a 
kilogram  is  1,000  grammes;  the  kilogram  of 
pure  gold  is  worth  $664.60. 

Paper  Currency 

Prior  to  1848  France  had  a  number  of  char-"))  '^ 
tered  banks  issuing  currency  largely  on  credit 
all  over  the  country.  It  was  at  about  this 
time  that  the  troubles  similar  to  those  experi- 
enced in  other  countries,  led  to  the  concen- 
tration of  the  function  in  the  Bank  of  France. 
This  institution  was  created  in  1800  by  the  ' 
first  Napoleon,  who  with  his  family  and  friends 
continued  for  some  years  to  control  the  capital 


^ 


ZZ 


ROYAL  MINT,  LONDON 


THE  FRENCH  MINT,  PARIS 


THE     WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


thereof.     The  shares  passed  into  private  hands  ^| 
with  the  disappearance  of  the  great  emperor,    ( 
and  have  remained  there  ever  since.    Originally    J 
the  amount  was  30,000,000  francs  (nearly  $6,- 
000,000).    This  has  been  repeatedly  increased, 
until  the  present  figure  of  182,500,000  francs 
was  reached  in  1857.     A  substantial  part  of  the 
increase  was  made  to  acquire  other  note-issuing 
banks  so  as  to  concentrate  the  function.    There 
are   32,500  share-holders,   but  only   the    200 
largest  holders  vote  for  members  of  the  govern- 
ing board. 

The  law  has  always  limited  the  gross  amount 
of  the  note-issues.  At  first  this  was  350,000,- 
000  francs;  it  is  now  5,800,000,000  francs. 
There  is  no  provision  in  the  law  prescribing 
a  specie  cover  for  notes,  the  sole  requirement 
being  that  the  notes  "shall  be  so  proportioned 
to  the  reserve  cash  in  the  vaults  of  the  Bank, 
that  the  Bank  can  at  no  time  be  exposed  to 
danger  of  delaying  payment  of  its  obligations 
when  presented."  Bearing  in  mind  that  this 
law  is  over  no  years  old,  the  wisdom  thereof 
is  striking. 

Yet  the  policy  of  the  management  has  been 
so  sound  that  the  Bank  has  survived  the  many 
political  changes  in  the  country  without  diffi- 
culties except  during  the  acute  revolutionary 
conditions  in  1848  and  1871 ;  and  has  given  the 
world  the  most  striking  example  of  how  to 
provide  a  stable  money  system. 

The  actual  management  is  in  the  hands  of  a 
governor  and  two  deputy  governors  who  are 
appointees  of  the  Government.  It  holds  the 
public  money;  it  operates  through  78  branches 
and  some  350  agencies  throughout  the  republic. 

The  charter  is  always  for  a  term  of  years  and 
is  regularly  renewed,  but  usually  some  addi- 
tional conditions  are  included,  such  as  increas- 
ing the  tax,  making  loans  to  the  Government, 
and  enlarging  the  maximum  of  note-issues. 
Yet  the  taxation  is  not  onerous;  i-io  of  i  per 
cent,  on  notes  issued  on  discounts,  1-50  of  i 
per  cent,  on  the  rest  of  the  issues  and  1-8  of 
average  discount  rate  on  the  first-named  item. 
The  tax  in  igio  amounted  to  $1,395,000. 

The  chief  point  recognized  by  all,  is  that  the 
Bank  is  a  great  public  institution,  serving  the 
people  as  a  whole  more  adequately  than  any 
other  similar  institution  in  the  world. 

The  notes  of  the  Bank  of  France  are  legal 
tender;  they  are  redeemable  either  in  gold  or 
in  silver  5-franc  pieces,  at  the  pleasure  of  the 
Bank;  but  the  right  to  redeem  in  silver  is  not 
often  exercised,  and  only  for  the  purpose  of 
discouraging  gold  exports  at  times  when  the 
poHcy  of  the  Bank  so  dictates. 

France  has  the  largest  per  capita  supply  of 
money,  $41, 


Deposit  Currency 

The  French  do  not  transact  any  considerable 
part  of  their  business  by  means  of  checks;  thus 
the  deposit-currency  is  insignificant.  Bank- 
notes and  coin  are  used  almost  entirely.  But 
the  public  are  afforded  remarkable  facilities 
through  the  discount  system;  even  the  smallest 
tradesman  may  have  his  paper  discounted  by 
the  Bank;  the  statistical  return  shows  that 
nearly  half  of  the  paper  thus  handled  by  the 
Bank  consists  of  bills  for  100  francs  (say  $20) 
or  less.  Here  is  the  chief  source  of  the  great 
public  benefit,  made  possible  by  the  use  of 
credit-notes,  not  requiring  a  coin  deposit  before 
the  Bank  can  issue  the  currency.  The  dis- 
count system  is  briefly  as  follows:  Commer- 
cial paper  of  any  amount,  bearing  three  names, 
and  having  not  more  than  90  days  to  run,  may 
be  discounted. 

Most  of  the  paper  so  far  as  amount  goes  is 
rediscoimted  through  the  other  banks,  which 
are  not  numerous  but  have  very  many  branches. 
These  banks  keep  balances  with  the  great 
Bank,  but  do  not  carry  large  reserves. 

The  ready  negotiabihty  of  small  commercial 
paper  actually  takes  the  place  of  checks  in  a 
large  measure.  The  small  tradesman  pays  his 
bills  with  a  draft  or  note  and  it  becomes  current 
paper  available  at  the  Bank  for  its  notes.  In 
order  to  provide  a  third  endorser,  an  inter- 
mediary institution  was  created  for  this  specific 
purpose  some  years  ago. 

Paris  also  has  an  open  market  for  money; 
the  rate  quoted  there  is  generally  somewhat 
below  that  of  the  Bank.  It  is  noteworthy  that 
the  rates  for  loans  upon  collateral,  i.  e.,  stocks 
and  bonds,  are  usually  a  trifle  higher  than  for 
commercial  paper.  This  is  a  normal  condition 
due  to  the  proper  development  of  a  discount 
market. 

Results  in  Operation 

The  table  accompanying  this  chapter  shows 
that  the  Bank  held  a  very  large  reserve  of  gold 
against  its  notes.  The  ratio  has  been  growing 
in  recent  years.  Thus  in  1896  it  was  56.7  per 
cent.,  in  1908  it  was  60  per  cent.,  in  191 1  it 
was  57.2  per  cent.  This  makes  for  stabihty. 
At  no  time  was  there  need  for  any  inordinate 
strain  to  increase  the  reserve  and  the  service 
to  business  was  uninterrupted. 

The  great  stability  is  more  definitely  shown 
in  the  discount  rates.  Since  1888 — a  period 
of  23  years,  the  rate  changed  only  twenty 
times.  From  1900  until  our  panic  of  1907  the 
rate  stood  at  3  per  cent,  without  change;  it 
then  rose  to  4  per  cent,  but  went  back  to 
3  per  cent,  in  January  1908.    When  the  recent 


35 


-  < 

fc  1=1 

o  o 

'-^  ^ 

<! 

M 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


troubles  with  Germany  over  Morocco  became 
acute,  the  rate  again  rose  to  4  per  cent,  for  a 
short  period. 

The  steadiness  of  the  discount  rate,  and  also 
the  lowness  of  the  rate,  is  a  boon  to  business 
that  can  hardly  be  over-estimated.  It  means 
a  value-measure  as  nearly  steady  as  can  be 
devised.  It  is  hence  a  proper  subject  for  care- 
ful consideration,  why  the  same  results  should 
not  be  attained  elsewhere.  While  conditions 
in  France  with  its  limited  area,  are  in  some 
respects  peculiar,  the  fact  that  her  mechanism 
for  regulating  monetary  affairs  is  so  far  superior 
in  results  to  any  other,  should  direct  attention 
to  the  study  thereof  in  every  detail. 

There  are  no  rigid  reserve  requirements,  yet 
the  reserve  is  larger  than  that  of  the  Bank  of 
England;  there  is  no  tax  on  note-issues, 
except  a  very  small  excise  rate  on  the  uncov- 
ered notes,  yet  the  elasticity  of  volume  is 
greater  than  in  Germany. 

France  has  also  seasonal  demands  for  cash 
which  require  expansion;  but  the  Bank  has 
furnished  as  high  as  $70,000,000  a  week  for 
such  purposes  without  a  tremor  in  the  ordinary 
course  of  business.  Here  such  a  draft  on  New 
York's  reserves  would  shake  the  stock  market. 


It  is  further  to  be  said  that  the  Bank's 
policy  has  rarely  been  a  narrow  one  in  the 
international  field.  When  legitimate  demands 
for  gold  arise  and  manifest  themselves  in 
Paris,  she  lets  gold  go  freely,  so  long  as  the 
domestic  business  is  not  in  any  way  jeopardized. 
It  thus  has  repeatedly  happened  that  the  Bank 
of  France  has,  in  an  unobtrusive  fashion 
taken  the  dominant  position  in  the  world's 
money  markets,  displacing  the  British  insti- 
tution. But  the  policy  has  been  not  to  seek 
such  dominance,  since  the  domestic  business 
needs  are  regarded  as  paramount. 

Nor  has  there  been,  except  upon  rare  occa- 
sions of  grave  national  import,  any  inter- 
ference with  the  management  by  the  Govern- 
ment. It  actually  has  the  ruling  power,  in  the 
appointment  of  the  managers;  having  exer- 
cised that  it  keeps  its  hands  off. 

It  should  finally  be  said  that  the  Bank's 
shares  pay  dividends  as  high  as  17  per  cent. 

The  Bank  makes  a  report  weekly  and  a 
comprehensive  statement  at  the  end  of  the 
year. 

Following  is  a,  condensed  report  of  the  Bank 
for  Nov.  2,  191 1,  the  amounts  being  stated 
in  francs. 


0 


BANK  OF  FRANCE 


Liabilities 

Capital 182,500,000 

Surplus  and  Profits 42,530,000 

Notes 5,493,620,000 

Public  Deposits 358,010,000 

Other  Deposits 575,124,000 

Other  Items 320,216,000 


Assets 

Gold. 3,144,160,000 

Silver 789,724,000 

Discounts 1,724,385,000 

Loans  on  Securities 672,175,000 

Loans  to  Government 199,980,000 

Other  Items 441,576,000 


Total 6,972,000,000 


Total 6,972,000,000 


The  returns  of  the  other  reporting  banking  institutions  of  France  show  the  following  items  in 
francs : 


Capital  and  Surplus 1,3  20,000,000 

Deposits 2,200,000,000 

Current  Accounts 2,700,000,000 

-Acceptances 700,000,000 

Other  Liabilities 280.000,000 


7,200,000,000 


Bills  Discounted 3,100,000,000 

Loans 750,000,000 

Current  Accounts 1,900,000,000 

Cash* 520,000,000 

Securities,  etc 930,000.000 

7,200,000,000 


*  In  hand  and  at  Bank  of  France. 


Of  the  total  thus  shown  three  institutions  with  about  1,000  branches  have  fully  66  per  cent. 
There  is  a  mortgage  bank  with  over  5,000,000,000  francs  of  assets. 
The  savings  banks  show  deposits  of  5,500,000,000  francs. 


37 


REICH.SI5ANIC,  BERLIN 
IMPERIAL  BANK  OF  GERMANY 


The  German  System 


Coin 


GERMANY  has  a  unique  coinage  system 
based  upon  the  ancient  mark.  Prior 
to  the  unification  under  the  Empire 
in  187 1,  there  were  numerous  small 
states,  each  with  its  own  system.  There  had 
been  some  uniformity  developed  out  of  the 
ancient  heterogeneous  money  regulations  dur- 
ing that  long  period  when  Austria  dominated 
in  the  electoral  empire.  But  even  then  there 
was  much  confusion. 

Silver  had  been  the  prevaihng  standard 
money  metal  for  centuries.  The  laws  of  1 87 1  and 
later  years,  established  the  gold  standard,  but  for 
a  time  permitted  the  existing  thalers  (dollars)  or 
largest  silver  coins  to  continue  full  legal  tender. 
They  have  been  recoined  from  time  to  time 
and  have  now  practically  disappeared. 

The  mark  is  the  unit,  but  is  too  small  to  be 
coined  in  gold,  being  c«ily  6.15  grains  in  weight, 
and  valued  at  23.8  cents.  The  metric  system 
prevails.  The  lo-mark  piece  weighs  3.982 
grammes;  all  coins  are  .900  fine.  The  silver 
mark  contains  5  grammes  of  pure  metal.  The 
divisional  piece  is  the  pfennig  of  which  100  go 
to  a  mark. 

Pater  Currency 

Here  as  in  other  countries  many  individual 
banks  formerly  issued  note^;  at  the  date  of 
the  creation  of  the  Empire  there  were  about  33-; 
then  the  Imperial  Bank  was  estabhshed  (1876) 
and  gradually  the  others  gave  up  note-issues; 
there  are  now  only  four,  one  each  in  Baden, 
Bavaria,  Saxony,  Wurtemberg;  but  their 
emissions  are  not  large. 

Although  the  Imperial  Bank  is  a  private 
stock  corporation,  the  Government  appoints 
the  managing  board;  the  Imperial  Chancellor 
is  chairman;  it  thus  has  virtual  control,  and 
under  the  charter  may  buy  the  stock  at  the 
end  of  any  ten-year  period,  that  being  the 
term  of  its  existence,  usually  renewed,  with 
fresh  conditions. 

It  is  interesting  to  note  that  the  Bank  is 
really  the  successor  of  the  Royal  Bank  of 
Prussia  which  dates  from  1765. 

The  capital,  originally  120,000,000  marks,  is 
now  180,000,000  (say  $42,850,000).  There  are 
about  19,000  shareholders;  one  vote  is  allowed 
each  share,  but  no  one  may  have  more  than 
300  votes.  They  elect  an  advisory  board  only. 
Dividends  are  primarily  limited  to  3^  per 
cent.,  except  that  if  profits  exceed  that  rate  the 
surplus  is  divisible,  four-fifths  to  the  Govern- 


ment and  one-fifth  to  shareholders.  The 
latter  actually  get  as  high  as  7  per  cent,  which 
would  mean  that  the  Government  gets  15  per 
cent.  The  Bank  has  some  500  branches  and 
sub-branches  throughout  the  Empire. 

The  note-issue  function  is  uniquely  regulated. 
A  fixed  amount  of  about  9  marks  per  capita 
may  be  issued  on  credit;  this  sum,  called  the 
''contingent"  is  618,000,000  marks  for  all  of 
the  five  banks,  the  Imperial's  share  being 
550,000,000  marks.  They  may  then  issue 
further  sums  to  the  amount  of  cash  on  hand; 
and  finally  an  unlimited  amount  on  credit 
subject  to  a  tax  at  the  rate  of  5  per  cent,  per 
annum;  but  at  least  one- third  of  the  "cover" 
for  notes  must  be  in  cash,  the  balance  in  com- 
mercial paper  discounted,  having  not  more 
than  ninety  days  to  run. 

In  order  to  provide  for  the  seasonal  demands 
for  more  money  the  law  has  been  amended 
recently  so  as  to  permit  the  enlargement  of  the 
untaxed  credit  issues  at  the  end  of  each  quarter, 
if  necessary,  to  750,000,000  marks. 

Silver,  and  notes  of  the  other  issue  banks 
may  be  treated  as  part  of  the  cash  reserve. 
There  are  also  Imperial  Treasury  notes,  issued 
against  120,000,000  marks  of  gold  in  the  "War 
Chest,"  which  may  be  so  held,  although  these 
notes  are  irredeemable. 

If  the  Bank  has  1,500,000,000  marks  of  notes 
in  circulation,  and  939,000,000  cash  on  hand, 
the  561,000,000  marks  of  credit  notes  would 
include  550,000,000  marks  untaxed  and  1 1,000,- 
000  marks  taxed,  except  at  the  quarter-days. 

The  taxing  device  is  manifestly  to  restrain 
inflation;  if  the  tax  were  added  to  the  dis- 
count rate  the  cost  of  loans  would  be  dis- 
couraging. Actually  it  is  not  added  in  full  and 
often  the  Bank  makes  no  addition;  for  it  is  of 
record  that  the  rate  stood  at  4^  per  cent,  when 
the  tax  had  to  be  paid  on  a  substantial  part 
of  the  notes. 

The  Bank  discounts  two-name  paper  for 
any  one  having  an  account  with  it ;  the  Umit 
of  time  for  the  paper  is  three  months. 

The  system  pro\ddes  for  far  greater  elasticity 
than  that  of  England,  but  not  as  much  as  that 
of  France. 

The  Bank  makes  a  brief  report  four  times  a 
month  and  a  very  full  one  annually. 

Deposit  Currency 

Checks  are  used  more  freely  in  Germany 
than  in  France,  but  not  nearly  as  generally  as 
in  Great  Britain.     Hence  deposit-banking  is 


39 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


not  of  dominant  importance,  but  there  is 
evidence  of  an  increase  in  the  volume.  The 
accompanying  tables  reflect  the  conditions. 
Clearings  are  large,  having  increased  from 
42,000,000,000  marks  in  1906  to  63,000,000,000 
in  191 1 ;  but  chiefly  in  large  checks. 

There  are  no  reserve  requirements  against 
deposits,  which  is  a  defect  now  that  deposits 
are  growing. 

Germany  actually  uses  more  coin  than 
paper  currency  or  checks.  This  circumstance, 
due  to  habit  and  the  absence  of  small  notes, 
has  often  deprived  the  Bank  of  the  power  over 
gold.  It  is  estimated  that  the  stock  of  gold  is 
$1,100,000,000  of  which  $800,000,000  is  in  the 
people's  hands;  and  the  money  of  all  kinds 
per  capita  is  given  at  $23.49. 

The  Imperial  Bank  allows  no  interest  on 
deposits,  although  permitted  to  do  so  by  its 
charter  to  a  limited  extent. 

While  Germany  has  quite  a  large  number  of 
commercial  banks,  the  bulk  of  the  business  is 
done  by  a  few  very  large  instutitions  with 
numerous  branches ;  some  of  these  also  control 
many  local  banks.  They  all  keep  accounts 
with  the  Imperial  Bank  and  discount  paper 
there.  They  regulate  the  "open  market"  for 
money,  and  are  permitted  to  conduct  stock- 
brokerage  business.  This  has  been  one  of  the 
features  operating  to  forward  Germany's 
industrial  development,  which  has  called  for 
corporations  with  share-issues.  As  a  result 
the  preference  given  commercial  loans  in 
London  and  Paris  is  not  so  marked  in  Berlin. 

Results  in  Operation 

Germany's  discount  rate  ranges  higher  than 
that  of  England  and  France,  and  is  also  much 
more  erratic.  It  is  not  an  infrequent  event  to 
have  a  7  per  cent,  rate  recorded.  In  the  twenty 
years  from  1888  there  were  69  changes  in  the 
rate,  the  range  being  between  3  and  yj^  per 
cent.  In  every  one  of  these  years  taxed  notes 
were  necessary,  although  in  eight  of  the  years 


the  discount  rate  was  under  the  5  per  cent, 
tax  rate. 

Great  flexibility  is  of  course  possible  under 
the  system,  but  subject  to  the  tax.  During 
our  panic  of  1907  the  expansion  in  three  weeks 
exceeded  $100,000,000  and  the  subsequent 
contraction  in  a  month  was  $140,000,000. 

About  60  per  cent,  of  the  discounting  is  for 
the  banks.  The  rule  is  to  exact  higher  rates 
for  loans  on  collateral,  usually  about  i  per  cent. 

The  Bank  makes  free  transfers  of  balances 
on  its  books  between  branches  and  agencies; 
this  is  a  boon  to  the  business  men,  for  payments 
at  a  distance  can  thus  be  made  without  ship- 
ment of  cash.  These  transactions  in  domestic 
exchange  constitute  the  chief  business  of  the 
Bank,  so  far  as  volume  goes;  and  it  takes  the 
place  of  check  transactions  in  large  measure. 

We  do  not  find  in  the  German  system  the 
same  degree  of  adaptabiUty  to  business  needs, 
with  a  stability  to  the  value-measure,  that  is 
found  in  France.  This  is  partly  due  to  the 
great  needs  of  the  evolutionary  period  through 
which  Germany  has  passed  in  the  40  years 
since  it  began  to  shake  off  medieval  methods. 

In  some  respects  the  conditions  are  similar 
to  those  in  the  United  States;  enormous 
capital  demands  for  industrial  purposes  coin- 
cident with  the  commercial  needs  growing 
almost  as  rapidly.  Germany  is  the  marvel  of 
Europe  in  this  development;  yet  she  might 
have  accomplished  this  at  far  less  cost  with  a 
better  system. 

France  on  the  other  hand,  has  always  a  large 
surplus  of  capital  available  for  investment 
abroad  after  providing  for  all  home  needs.  It 
is  worth  while  comparing  the  economic  de- 
velopment of  these  two  countries  since  their 
war  of  1871;  France  paid  $1,000,000,000 
indemnity  in  cash  and  lost  territory;  but 
to-day  she  lends  money  to  Germany  by  the 
hundreds  of  millions.  Who  will  say  how  far 
the  stable  value-measure  has  helped  the 
French  and  the  unstable  one  injured  the 
Germans? 


IMPERIAL  BANK  OF  GERMANY,  RETURN  FOR  DECEMBER  30,   191 1 


Liabilities 

Capital i8o,cxx3,opo 

Surplus,  profits 64,814,000 

Notes 2,250,564,000 

Deposits 710,481,000 

Other 56,239,000 


3,262,098,000 


Assets 

Gold  and  silver 1.007,838,000 

Notes 40,753.000 

Securities 148,880,000 

Bills  discounted 1,792,646,000 

Loans  on  Collateral 117,243,000 

Other 154,738,000 

3,262,098,000 


The  taxed  notes  at  this  date  amounted  to  451,973,000  marks;  the  discount  rate  was  5  per  cent. 

40 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


The  fact  that  within  the  past  year  Germany 
has  borrowed  heavily  in  the  New  York  market, 
is  taken  as  evidence  that  her  system  has  broken 
down.  Certain  it  is  that  it  has  proved  in- 
adequate and  requires  improvement. 

It  would  appear,  however,  that  the  absence 
of  all  tax  upon  notes  in  Germany  would  have 
been  dangerous,  looking  back  upon  the  specu- 
lative era.  It  is  now  worth  considering  whether 
a  tax  graduated  by  conditions,  would  not  be 
better  than  the  arbitrary  fixed  rate  of  5  per 
cent.  What  is  equally  important  to  consider 
is  the  increase  in  gold  in  reserves;  this  has 
now  been  taken  into  serious  consideration  by 
the  Government  and  results  may  soon  be 
looked  for. 

A  recent  statement  of  the  Imperial  Bank 
is  appended,  the  amounts  being  given  in 
marks. 

A  statement  of  the  banking  power  follows, 
amounts  again  in  marks;  the  Berlin  banks  are 
the  nine  great  institutions  which  have  helped 
the  Imperial  Bank  build  up  Germany's  in- 
dustries : 


The  banks  which  do  not  issue  notes  are  not 
required  to  state  their  actual  cash  holdings; 
they  usually  report  "cash  on  hand  and  at 
banks"  and  sometimes  include  "cash  items." 
The  figures  thus  reported  make  up  about 
1,000,000,000  marks.  The  cash  estimates  in 
the  table  are  based  upon  the  actual  return  of 
the  Deutsche  Bank,  the  greatest  of  them, 
which  shows  a  ratio  of  about  6  per  cent. 
Measuring  the  total  cash  against  total  notes 
plus  deposits  and  current  accounts,  it  will  be 
seen  how  heavily  the  other  banks  rely  upon 
the  Imperial  Bank,  whose  own  cash  stands  at 
about  34>^  per  cent. 

None  of  the  banks  except  the  issue-banks 
are  subject  to  examination  or  to  reporting, 
except  the  annual  reports  required  by  the  laws 
of  all  corporations. 

Germany  has  very  old  and  successful 
mortgage  banks,  which  have  loaned  out 
9,000,000,000  marks;  also  small  local  institu- 
tions for  assisting  agriculture,  which  show 
4,500,000,000  marks  of  loans. 

Savings  banks  show  deposits  of  3,700,000,- 
000  marks. 


GERMANY'S  BANKING  POWER,  IN  MARKS 


5  Issue  Banks      g  Berlin  Banks        412  Others 


All 


Capital  and  Surplus 315,343,000 

Deposits 765,730,000 

Notes 2,403,013,000 

Acceptances j  

Other  Creditor  Accounts     81,492,000 

Cash j  1,129,398,000 

Bills  Discoimted. 1,954,417,000 

Loans 152,884,000 

Securities,  &c 160,524,000 

Other  Debtor  Accounts 168,355,000 

Totals [  3,565,578,000 


1,640,200,000 
2,061,000,000 


1,880,000,000 
800,000,000 


1,252,000,000 
2,908,600,000 


1,020,000,000 
1,980,000,000 


360,000,000! 
1,698,300,000 

1,517,400,000 

907,300,000 

3,378,800,000 


220,000,000t 

1,250,000,000 

900,000,000 

490,000,000 

2,820,000,000 


3,835,543,000 
3,626,730,000 
2,403,013,000 
2,272,000,000 
4,970,092,000 

1,709,398,000 
4,902,717,000 
2,570,384,000 
1,557,824,000 
6,367,155,000 


7,861,800,000  i   5,680,000,000     17,107,378,000 


*  Partly  approximated. 


t  Estimated;  see  text. 


The  System  of  Austria  Hungary 


Coin 

PRIOR  to  the  union  of  the  two  mon- 
archies which  constitute  the  chief  parts 
of  this  Empire,  Austria  was  a  German 
state  and  the  money  system  was  much 
the  same  as  that  of  the  earlier  days  of  the 
other  sections  of  Germany.  When  the  present 
Empire  was  constituted  (1867)  the  Austrian 
system,  somewhat  developed,  was  imposed 
on  the  other  states;  but  Hungary  has  always 


had  its  own  coins.  The  silver  standard  domi- 
nated until  1892,  when,  in  fact,  a  radical 
change  took  place.  The  former  unit  (the 
florin)  was  worth  48.2  cents,  or  exactly  2^ 
francs;  the  present  unit  (krone)  is  valued  at 
20.26  cents  and  has  no  relation  to  any  other 
unit  of  coinage.  In  this  particular  a  step 
backward  was  taken  when  the  gold  standard 
was  adopted. 

The  gold  crown  is  theoretically  .3387  of  a 
gramme,  equal  to  5.228  grains,  hence  too  small 


41 


^    ^ 


X 


THE    WORLD'S     PRINCIPAL     MONETARY     SYSTEMS 


to  be  coined;  gold  coins  are  900  fine.  The 
silver  crown  weighs  5  grammes,  and  is  also 
.900  fine. 

Paper  Currency 

The  reform  of  1892  also  extended  to  the 
paper  currency.  Both  government  notes  and 
bank  notes  were  in  use  up  to  that  date,  and  both 
had  been  for  many  years  sadly  depreciated, 
not  only  because  they  were  payable  in  silver, 
but  because  in  the  absence  of  adequate  re- 
serves, the  notes  were  irredeemable.  The  bank- 
note issue  had  for  a  number  of  years  prior 
been  concentrated  in  one  bank;  hence  the 
reform  of  1892  had  to  deal  only  with  that 
institution.  The  reform  is  to  be  recorded  as  a 
highly  creditable  undertaking,  accomplished 
only  after  much  sacrifice  and  tribulation;  for 
the  plans  did  not  work  out  as  rapidly  and  as 
fully  as  had  been  hoped.  The  Government 
retired  its  notes  with  the  help  of  the  Bank  and 
the  latter's  issues  have  finally  been  brought 
to  par  in  gold.  But  compulsory  redemption 
is  not  yet  legally  fixed. 

The  Austro-Hungarian  Bank  is  the  successor 
of  the  Austrian  National  Bank,  founded  in 
1816.  The  charter  has  been  repeatedly  re- 
newed by  special  legislation,  since  1878,  when 
the  present  title  was  adopted.  The  capital, 
210,000,000  crowns,  or  about  $42,000,000,  is 
all  privately  owned,  but  the  Government 
appoints  the  chief  officers  and  half  the  direc- 
tors, and  maintains  careful  supervision.  It 
operates  through  250  branches,  and  is  pre- 
eminently an  institution  for  public  service. 
In  1890  the  plan  for  note-issuing  was  altered 
to  correspond  with  that  of  Germany.  Credit 
notes  may  be  issued  to  the  extent  of  470,000,- 
000  crowns;  beyond  that  sum  notes  issued 
without  full  coin  cover  pay  a  tax  of  5  per  cent, 
per  annum;  the  reserve  in  gold  must  equal  40 
per  cent,  of  both  notes  and  deposits;  the  notes 
not  covered  by  coin  must  have  commercial 
paper  and  securities  behind  them.  Elasticity 
is  thus  amply  provided  for,  subject  to  the  tax; 
the  fact  that  the  tax  is  usually  paid  during  crop- 
moving  periods,  shows  the  utility  of  the  plan. 


But  the  tax  is  not  usually  added  to  the  dis- 
count rate,  the  Bank  paying  it  out  of  its  profits 
as  a  public  service.  Since  the  Government 
shares  in  the  profits  this  is  a  proper  policy. 
Thus  shareholders  first  get  4  per  cent,  divi- 
dends; any  further  profits  are  divided  equally 
with  the  Government,  after  putting  10  per 
cent,  thereof  in  the  surplus  fund;  after  share- 
holders have  had  6  per  cent,  dividends,  the 
Government  gets  two-thirds  of  the  excess. 
Actually  the  shareholders  get  about  7  per 
cent. 

The  Bank's  notes  are  legal  tender,  and  are 
issued  in  small  denominations;  thus  fully  half 
the  issue  is  in  notes  of  50,  20  and  10  crowns. 
This  has  helped  the  Bank  to  obtain  gold.  Of 
$357,000,000  of  gold  in  the  country  only 
$85,500,000  is  estimated  to  be  in  circulation. 
The  per  capita  money  supply  is  $12.47. 

Deposit-Currency 

Checks  are  not  extensively  used,  yet  other 
banks,  which  are  quite  numerous,  carry  fairly 
large  deposits.  They  are  not  required  to  hold 
fixed  reserves  and  in  fact  do  not  carry  large 
sums  in  cash,  depending  upon  the  central  bank 
for  means  when  needed.  The  result  is  that  the 
note-issues  are  quite  large,  usually  exceeding 
2,000,000,000  crowns.  Against  this  there  is 
always  a  substantial  reser\'e.  But  a  very  large 
part  of  the  check  business  is  done  by  the  trans- 
fers of  credits  by  the  central  banks  and  by 
the  highly  developed  postal  savings  bank 
system. 

Discount  rates  are  usually  lower  than  in 
Germany,  ranging  between  33^  and  5  per  cent, 
and  are  fairly  steady.  The  money  market  is 
not  so  largely  influenced  by  speculative  loans 
as  in  Berlin;  for  Austria  has  not  had  such  a 
period  of  industrial  development. 

With  parity  restored  to  the  paper  currency 
the  system  is  operating  with  great  practical 
benefit. 

Some  of  the  principal  items  in  the  Bank's 
statement  appear  below,  the  amounts  being 
given  in  kronen: 


AUSTRO-HUNGARIAN  BANK 


Capital 210.000,000 

Surplus 16,000,000 

Notes 2,320,000,000 

Deposits 254,000,000 

Mortgage  Bonds 292,000,000 


Gold 1 ,308,000,000 

Silver 282,000,000 

Bills  Discounted 1,013,000,000 

Loans 85,000,000 

Mortgages 300,000,000 


Total  resources  are  nearly  3,30,0000,000  kr. 


43 


H 

O     w 
(a    » 


Pi    o 

3   o 


THE     WORLD'S     PRINCIPAL    MONETARY    SYSTEMS 


Other  reporting  banks  show  total  resources 
of  over  4,700,000,000  kr.,  but  this  does  not 
represent  the  full  commercial  banking  power, 
as  the  statements  of  some  2,500  small  banks 
are  not  available. 


Savings  banks  of  the  several  classes  show 
deposits  of  fully  7,500,000,000  kr.  Some  of 
the  postal  savings  banks  carry  checking 
accounts. 


Russia's  System 


Coin 


THE  coinage  system  of  Russia  rested  on 
silver  until  1899  and  hence  the  money 
was  depreciated  and  fluctuating.  The 
adoption  of  the  gold  standard  made 
the  unit  the  (ruble  of  100  copecks)  13.27  grains 
of  gold  .900  fine,  value  51.456  cents.  (Thus 
■j}4  rubles  =  20  francs.)  Subsidiary  silver  is 
coined  at  .900  fine  for  the  larger  pieces,  but 
only  .500  fine  for  the  smaller.  A  large  amount 
of  silver  is  used,  since  the  gold  stock,  though 
very  large,  is  chiefly  in  bank.  The  estirnated 
total  gold  in  the  country  is  $761,400,000; 
with  154,000,000  population  the  money  per 
capita  is  reckoned  at  $6.75.   This  is  very  small. 

Paper  Currency 

The  paper  currency  is  all  issued  by  one  bank, 
established  in  i860,  which  has  a  capital  of 
50,000,000  rubles  all  owned  by  the  Govern- 
ment; hence  the  Bank  is  virtually  a  part  of 
the  Finance  Department,  but  the  note-issuing 
is  now  conducted  on  strict  banking  principles. 
For  many  years  the  currency  was  sadly  de- 
preciated, but  with  the  great  reform  coin- 
cident with  the  adoption  of  the  gold  standard, 
gold  was  acquired  by  bond-issues  and  the 
reserve  fortified.  The  currency  thus  became 
sound. 

The  note-issues  of  the  Bank  are  permitted 
to  exceed  the  coin  on  hand  by  300,000,000 
rubles;  but  gold  held  abroad  may  also  be 
included  as  reserve.  Except  in  case  of  great 
stress  the  issue  has  always  been  well  within 
the  limit.  For  present  Russian  conditions  the 
reserve  provision  appears  satisfactory;  but  as 
the  country  develops  under  the  influence  of 


the  new  regime,  it  will  be  necessary  to  provide 
a  more  elastic  system  for  regulating  issues. 

The  Bank  discounts  freely  for  other  banks 
and  merchants,  and  regulates  the  discount 
rate.    It  has  about  100  branches. 

The  notes  of  the  Bank  are  legal  tender. 

Dei'osit  Currency 

Checks  are  not  largely  used;  but  antici- 
pating development  there  have  been  enacted 
laws  to  regulate  the  other  commercial  banks 
which  will  have  a  salutary  effect.  Thus 
individual  loans  are  limited  to  10  per  cent,  of 
capital  and  total  liabilities  to  five  times  the 
capital;  reserves  of  10  per  cent,  against 
deposits,  in  cash  or  in  balances  at  the  Imperial 
Bank,  and  annual  reports,  are  prescribed; 
examinations  are  also  provided  for;  loans  to 
directors  are  prohibited  and  directors  of  one 
bank  may  not  be  such  in  any  other. 

There  are  many  small  municipal  banks  for 
local  business,  and  several  large  ones  for  the 
foreign  trade. 

Finland  has  a  money  system  and  a 
central  bank  of  its  own. 

Discount  rates  are  higher  than  in  most 
European  countries,  having  ranged  from  4^ 
to  8  per  cent,  in  recent  years;  5  to  6  per  cent. 
is  normal. 

Statistics  following  show  banking  items  in 
rubles. 

A  partial  return  of  commercial  and  municipal 
banks  yields  a  total  of  resources  aggregating 
2,000,000,000  rubles. 

Mortgage  banking  is  well  developed,  show- 
ing about  800,000,000  rubles  of  assets. 

Savings  banks  show  about  1,560,000,000 
rubles  of  deposits. 


BANK  OF  RUSSIA 


Liabilities 

Capital 50,000,000 

Note-issues 1,428,000,000 

Deposits 42,000,000 

Government  Funds 456,000,000 

Current  Accounts 184,000,000 

Special  Deposits 296,000,000 

Other 68,000,000 

Total 2,524,000,000 


Assets 

Gold 1,300,000,000 

Gold  Abroad 1 70,000,000 

Silver,  &c 62,000,000 

Bills  discounted 442,000,000 

Loans 388,000,000 

Securities 122,000,000 

Other 40,000,00c 

Total 2,524,000,000 


45 


9  < 

<  ^ 

^  - 

e 


Italy's  System 


Coin 


I 


TALY  has  a  coinage  system  identical  with 
that  of  France;  the  franc  is  called  the 
lira  (plural  lire)  and  is  divided  into  loo 
centesimi. 

Paper  Currency 


Paper  currency  is  issued  by  the  Go\ernment 
and  by  three  banks;  but  of  these  banks  two 
are  relatively  unimportant  to  the  system;  the 
Bank  of  Italy  is  to  all  intents  and  purposes 
the  central  bank,  with  a  30-year  charter  from 
1893.  It  was  created  by  merging  a  number  of 
others. 

The  Government  currency  consists  in  part 
of  small  silver  notes ;  it  is  not  fully  covered  by 
coin  and  is  purely  for  domestic  use,  hence  plays 
no  important  part  in  the  general  conditions; 
yet  if  the  country  could  afford  it  the  people 
would  be  better  off  without  this  currency. 

For  many  years  prior  to  the  establishment 
of  the  present  system  (1893)  there  was  a  long 
era  of  badly  depreciated  currency.  It  will  be 
recalled  that  the  present  union  of  Italian 
states  dates  from  about  1861;  before  that  each 
had  its  banks  of  issue,  many  poorly  regulated, 
although  Italy  had  the  earliest  experience  with 
banks,  Venice  having  had  one  as  early  as  the 
twelfth  century  and  Genoa  following  some- 
what later;  the  present  Bank  of  Naples  dates 
from  1539. 

After  the  union  the  central  government 
undertook  to  unify  the  bank-note  system  and 
in  part  succeeded;  but  the  plan  was  so  de- 
fective that  failure  followed.  Sound  prin- 
ciples dictated  the  plan  of  1893,  but  the  labor 
of  regeneration  was  slow  and  it  has  been  only 
within  a  decade  that  the  currency  has  be- 
come sound. 

The  capital  of  the  Bank  of  Italy  is  240,- 
000,000  lire,  but  only  180,000,000  is  paid  up. 
It  is  all  privately  owned;  shareholders  have 
one  vote  for  each  20  shares,  but  none  may  cast 
more  than  50  votes,  no  matter  how  many 
shares  are  held.  The  shareholders  elect  the 
22  directors,  and  these  choose  the  general 
manager  and  submanagers,  subject  to  approval 
of  the  Government.  The  Bank  operates 
through  102  branches  and  agencies.  There  are 
about  10,000  shareholders. 

The  Government  shares  largely  in  the 
profits.  Thus  dividends  are  limited  primarily 
to  5  per  cent.,  then  out  of  further  profits  one- 
third   goes    to    the    Government,    two-thirds 


belongs  to  shareholders  until  they  have  6  per 
cent.;  any  excess  is  equally  divided  between 
shareholders  and  Government.  Actually  the 
shareholders  have  not  had  the  higher  dividend 
because  the  Bank  had  many  burdens  to 
liquidate.  Furthermore,  the  Government  gets 
a  substantial  income  from  a  note-tax. 

The  two  other  issue  banks  (Naples  and 
Sicily)  have  no  share-capital  in  the  usual 
sense,  having  bought  out  the  shareholders 
long  ago. 

Note-Issues 

Note-issues  are  regulated  thus:  the  chief 
Bank  may  issue  666,000,000  lire  on  40  per  cent, 
reserves;  the  other  two  248,000,000  lire; 
beyond  these  sums  the  issues  must  be  fully 
covered  by  coin ;  but  for  emergencies  the  chief 
Bank  may  issue  150,000,000  lire,  on  a  40  per 
cent,  reserve  if  it  pays  a  tax,  graduated  by 
amount.  On  part  of  the  issues  in  excess  of  the 
fixed  sum,  the  Bank  pays  the  Government 
one-third  of  the  discount  rate  which  it  earns 
thereon;  on  a  second  part  the  exaction  is  two- 
thirds;  on  the  third  part  all  of  the  discount 
rate  earned  goes  to  the  Government.  This 
obviously  influences  the  discount  rate. 

One-fourth  of  the  note-reserves  may  be  in 
silver. 

In  fact  the  Bank  of  Italy  frequently  exceeds 
the  "normal"  or  fixed  issue  amount.  Yet 
discount  rates  have  in  recent  years  been  quite 
steady,  ranging  from  7,^2  to  5^  per  cent. 
Changes  are  infrequent  and  must  be  approved 
by  the  Minister  of  Finance. 

Private  deposits  may  be  taken,  but  interest 
may  be  allowed  only  to  one-third  the  dis- 
count rate. 

Deposit  Currency 

The  use  of  checks  has  not  developed  ma- 
terially and  deposits  do  not  therefore  play  an 
important  part  in  the  system.  There  are 
numerous  commercial  banks.  The  regulation 
of  these  by  the  Government  is  not  serious; 
they  make  annual  reports  the  same  as  other 
corporations;  there  are  no  reserve  laws.  A 
bureau  of  the  Treasurj^  examines  the  issue 
institutions,  and  all  savings  banks. 

The  system  of  rediscount  and  transfers  of 
funds  partly  makes  up  for  the  absence  of 
checks.  Two-name  paper  having  not  more  than 
four  months  to  run  is  available  for  rediscount 
at  the  Bank  at  any  time,  and  special  provi- 
sion is  made  for  the  facilitation  of  commerce 
and  industry  on  a  large  scale;    yet  the  small 


47 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


tradesman  is  also  accommodated,  as  in  France. 
The  money  supply  is  estimated  at  $13.88  per 
capita. 

In  the  past  ten  years  the  reform  has  un- 
questionably improved  conditions  enormously, 
due  to  the  centralized  system  and  able  man- 
agement. 

Statistics  of  banking,  amounts  stated  in 
lire,  follow: 


The  two  other  issue  banks  have  about 
500,000,000  lire  of  notes,  350,000,000  lire  of 
coin  reserve;  total  resources  about  800,000, 
000  lire.  Other  commercial  banks  have  about 
1, 7oo,ooo,ooolire  in  resources,  and  savings  banks 
report  deposits  of   nearly  4,000,000,000   lire. 

There  are  a  few  large  mortgage  banks  with 
about  1,500,000,000  lire  in  assets;  also  agri- 
cultural credit  banks  for  small  borrowers. 


BANK  OF  ITALY 


Liabilities 

Capital i8o,cxx3,ooo 

Surplus 1 20,000,000 

Notes 1,931,000,000 

Deposits  and  Current  Accounts 305,000,000 


Assets 

Cash 1,510,000,000 

Bills  discounted 724,000,000 

Advances 167,000,000 

Due  from  Banks 1 18,000,000 


Switzerland's  System 


THE  coinage  system  of  Switzerland  is 
identical  with  that  of  France;  the 
unit  is  also  the  franc  of  100  centimes. 
Paper  currency  was  for  many  years  issued 
by  banks  chartered  by  the  several  cantons 
(states)  and  the  system  operated  defectively. 
In  most  cases  the  cantons  owned  the  banks; 
in  others  they  provided  more  or  less  super- 
vision; but  uniformity  was  lacking.  After  a 
fruitless  endeavor  on  the  part  of  the  Federal 
Government  to  regulate  these  institutions,  by 
prescribing  uniform  reserve  requirements  and 
minor  regulations,  the  present  central  bank 
system  was  adopted  in  1905  and  established  in 
1Q07;  under  it  the  forty- two  individual  banks 
have  been  deprived  of  note-issuing  powers, 
but  continue  to  carry  on  all  other  kinds  of 
banking  business. 

Other  commercial  banks  exist,  a  few  of  them 
quite  important.  Deposit-currency  is  not 
extensively  employed,  since  the  habit  of  using 
checks  has  not  developed  materially.  Money 
par  capita  is  estimated  at  $31.39.  Clearing- 
houses were  established  in  1907. 

The  Swiss' National  Bank 

The  Bank  has  a  20-year  charter;  the  capital 
is  50,000,000  francs  but  only  half  is  paid  up. 
The  shares  are  owned  thus:  16  per  cent,  by 
the  former  issue  banks,  39  per  cent,  by 
the  cantons,  and  45  per  cent,  by  about  10,000 
individuals  or  firms.  No  shareholder  can  have 
more  than  100  votes.  Of  the  40  directors  the 
Government  appoints  25;  the  chief  officers  are 
appointed  by  the  Government  on  recom- 
mendation of  the  board;    so   also   the  local 


managers  of  the  several  branches.  The  head- 
office  for  discounting  is  in  Zurich,  the  chief 
city;  but  that  for  the  note-issuing  is  in  Berne, 
the  capital.  There  are  six  other  branches  and 
thirteen  agencies. 

Note-issues  are  limited  only  by  the  require- 
ment that  there  must  be  a  40  per  cent,  gold 
reserve,  and  the  balance  of  the  cover  in  com- 
mercial paper.  No  stock  collateral  loans  are 
permitted  and  no  investments  in  bonds  except 
governments;  loans  on  government  and  muni- 
cipal bonds  are  permitted.  Commercial  paper 
discounted  must  not  run  more  than  90  days, 
and  bear  two  names. 

Payment  of  interest  on  deposits  (except 
government  funds)  is  prohibited.  Dividends 
are  limited  absolutely  to  4  per  cent.  Further 
profits  go  to  surplus  (10  per  cent,  thereof)  and 
the  rest  to  the  Government,  which  pays  over 
two-thirds  thereof  to  the  cantons  to  reimburse 
them  for  the  loss  of  revenues  from  the  old 
system. 

It  may  discount  for  any  one,  may  buy 
bullion  and  foreign  exchange  and  issue  bullion 
certificates.  Its  notes  are  legal  tender  only  in 
payments  to  it  or  to  the  Government. 

Besides  the  examination  prescribed  by  a 
committee  of  the  board  there  is  a  govern- 
mental examination  provided  for.  A  short 
weekly  report  and  an  extended  annual  report, 
are  also  prescribed. 

Discount  rates  are  fairly  stable,  3^^  to  4^ 
per  cent,  being  the  usual  rate;  during  our 
panic  in  1907,  6  per  cent,  was  recorded.  There 
have  been  twelve  changes  in  the  rate  in  three 
years.  Rates  for  collateral  loans  are  always 
slightly  higher. 


48 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


This  is  the  most  recent  example  of  the 
establishment  of  central  regulation  of  banking, 
and  in  circumstances  somewhat  similar  to 
those  existing  in  the  United  States.  It  is  to 
be  noted  that  the  central  organization  was  not 
effected  until  July,  1907,  and  thus  the  new 
system  was  subjected  to  the  severe  test  of  a 
world-wide  financial  crisis  before  it  was  four 
months  old.  It  stood  this  test,  and  when  the 
crisis  passed  the  execution  of  the  purpose  for 
which  it  was  created, — regulation  of  the  cur- 
rency and  the  discount  rates,  with  uniformity 
of  action  throughout  the  republic, — was  satis- 
factorily realized. 

Under  the  provisions  of  the  law,  the  Bank 
assisted  the  former  issue  banks  to  withdraw 
their  notes  from  circulation  within  the  period 
fixed,  which  expired  in  1910. 

The  volume  of  currency  is  adapted  to  the 


needs  almost  automatically;  the  discount 
rates  are  uniform  throughout  the  land,  and 
relatively  low.  An  adequate  gold  reserve  has 
been  created  and  well  maintained;  the  out- 
flow of  the  yellow  metal  has  been  regulated 
by  the  Bank,  through  the  possession  of  a 
continuously  replenished  supply  of  foreign 
bills  of  exchange,  which  the  country's  export 
trade  furnishes. 

Following  are  statistics  of  banking,  amounts 
in  francs. 

The  former  issue  banks,  capitalized  at  about 
250,000,000  francs  show  deposit  liabilities  of 
1,600,000,000  francs  and  a  total  of  resources 
about  2,000,000,000. 

Savings  bank  deposits  amount  to  about 
1,500,000,000  francs.  The  aggregate  banking 
resources  are  thus  approximately  6,800,000,000 
francs;   the  population  is  3,559,000. 


SWISS  NATION.\L  BANK 


Capital 25,000,000 

Notes 266,000,000 

Deposits 182,500,000 


Coin     173,000,000 

Loans 139,000,000 

Securities 6,000,000 


The  totals  are  about  500,000,000  francs. 

SEVENTEEN  COMMERCIAL  BANKS 


Capital 390,000,000 

Deposits 1 ,076,000,000 

.Acceptances 308,000,000 

Obligations 870,000.000 


Cash 49,345,000 

Discounts 445,000,000 

Loans 198,000,000 

Securities,  &c 653,000,000 


The  accounts  balance  at  2,820,000,000  francs. 


Swed 


en's 


THE  Scandinavian  coinage  system,  of 
which  the  unit  is  the  kroner  of  100 
ore,  prevails  in  Sweden;  the  standard 
is  gold.  Theoretically  the  unit  is  6.914 
grains  of  gold  .900  fine,  value  26.8  cents. 

Paper  currency  is  now  issued  only  by  the 
Royal  Bank  (founded  1668)  which  is  owned 
by  the  Government  entirely.  The  governor 
is  appointed  by  the  king,  the  six  directors  by 
the  parliament.  Profits  go  to  the  Treasury — 
average  about  11  per  cent,  on  the  capital  of 
50,000,000  kroner,  after  placing  10  per  cent,  in 
the  surplus  fund. 

Its  notes  are  legal  tender.  The  issue  is 
limited  to  100,000,000  kr.  beyond  the  gold  on 
hand  or  in  foreign  banks,  but  40,000,000  kr. 


System 


of  the  gold  must  be  on  hand;  and  a  30  per 
cent,  metallic  reserve  must  be  established 
against  any  credit  notes  above  60,000,000  kr. 
Notes  not  thus  covered  must  have  securities 
or  bills  of  exchange  behind  them. 

A  monthly  report  and  a  comprehensive 
annual  statement  are  required. 

Prior  to  1903,  twenty-eight  other  banks  also 
issued  notes,  under  old  charters  and  ineffective 
regulation;  they  issued  more  than  the  chief 
institution ;  results  were  so  unsatisfactory,  since 
uniformity  was  lacking,  that  the  power  was 
concentrated  in  the  year  named.  The  central 
bank  assisted  the  others  in  gradually  liquidat- 
ing their  note  liabilities. 


49 


BANK  OF  SWEDEN,  STOCKHOLM 
SVERIGES  RIKSBANK 


MAIN  BANKING  ROOM 
SVERIGES  RIKSBANK 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


Deposit-currency  is  not  extensively  em- 
ployed;  money  per  capita  is  $12.18. 

Since  the  reform  there  has  been  a  marked 
improvement.  In  the  first  place,  the  Bank 
keeps  the  currency  well  protected,  yet  dis- 
counts very  freely,  two-name  paper  which  may 
run  up  to  six  months.  Expansion  and  con- 
traction of  volume  are  adapted  to  the  needs. 
This  was  well  exhibited  when  in  the  panicky 
period  of  1907  the  discounts  were  fully  equal 
to  the  note-issues. 

The  discount  rate  has  ranged  from  4^  to 
7  per  cent,  in  recent  years,  but  the  high  rate 


was  in  the  1907  panic.  Normally  it  is  about 
5  per  cent,  and  there  have  been  less  than  three 
changes  per  year  since  1901. 

Other  commercial  banks  are  now  required  to 
limit  individual  loans  and  prohibited  from 
taking  one-name  paper.  Monthly  reports  and 
periodical  inspection  are  prescribed. 

The  following  statement  gives  the  items  in 
the  Bank's  account  in  kroner. 

Other  commercial  banks  show  307,000,000 
kr.  capital,  and  2,400,000,000  kr.  resources. 
Savings  banks  have  920,000,000  kr.  on 
deposit. 


BANK  OF  SWEDEN 


Liabilities 

Capital 50,000.000 

Surplus 12,400,000 

Notes 190,000,000 

Due  Banks 50,000,000 

Public  Deposits 8,000,000 

Other 5,600,000 

Total 316,000,000 


Assets 

Gold 40,000,000 

Other  Cash 52,000,000 

Discounts 101,000,000 

Loans  and  Securities 25,000,000 

Due  from  Banks 75,000,000 

Other 23,000,000 

Total 316,000,000 


Belgium's   System 


BELGIUM  has  a  coinage  system  identical 
with  that  of  France;  the  franc  of  100 
centimes  is  the  unit.    Paper  currency 
is  issued  only  by  the  National  Bank ; 
there  are,  however,  special  conditions  govern- 
ing the  Bank's  operations  which  are  worthy 
of  notice. 

The  Bank  is  a  private  stock  corporation, 
created  by  special  charter  soon  after  the 
kingdom  separated  from  the  Netherlands 
(1851).  The  charter  now  runs  for  29  years 
from  1900.  Capital  is  50,000,000  francs,  all 
paid  in;  no  one  with  less  than  ten  shares  may 
vote,  but  no  one  may  have  more  than  five 
votes,  either  directly  or  as  proxy. 

The  shareholders  elect  six  directors  and 
seven  censors,  who  with  the  governor,  ap- 
pointed by  the  king,  constitute  the  council  of 
the  Bank.  The  directors  have,  under  the 
governor  the  active  management;  the  censors 
have  auditing  and  supervisory  functions.  The 
king  also  appoints  the  deputy  governor,  from 
among  the  directors,  and  the  managers  of  the 
branch  at  Antwerp  and  of  the  39  agencies. 
There  is  also  a  Government  official  charged 
with  supervision  and  examination. 

Checks  are  not  extensively  used.  The 
money-supply  is  estimated  at  $23.91  per 
capita. 


Dividends  are  primarily  limited  to  4  per 
cent.  Excess  profits  are  allotted  as  follows: 
25  per  cent,  to  the  Government,  10  per  cent,  to 
surplus,  5  per  cent,  to  the  managers,  60  per 
cent,  to  shareholders.  As  the  dividends  aver- 
age about  15  per  cent,  the  profits  are  evidently 
large.  Yet  the  Government  gets  other  revenues. 

Thus,  if  the  discount  rate  is  raised  above 
3^  per  cent,  the  profit  derived  from  the  excess 
rate  goes  to  the  Treasury;  and  if  the  note- 
issue  exceeds  265,000,000  francs  the  Treasury 
imposes  a  tax  of  a  quarter  per  cent,  on  the 
excess.  It  gets  no  interest  on  its  deposits  with 
the  Bank,  but  any  surplus  revenues  must  be 
invested  and  the  income  thereon  goes  to  the 
Treasury. 

The  notes  of  the  Bank  are  legal  tender;  the 
issue  is  limited  by  the  coin  reserve,  which  must 
be  at  least  one-third  of  all  demand  liabilities. 
In  fact,  however,  this  provision  may  be  sus- 
pended by  the  Government  and  this  is  fre- 
quently done,  particularly  when  the  Bank  has 
a  large  amount  of  foreign  paper  payable  in 
gold  (in  London  and  Paris,  very  near  by) 
which  is  regarded  a  satisfactory  reserve  asset. 

The  Bank  discounts  freely  for  all,  on  three- 
name  paper  having  not  more  than  100  days 
to  run;  two-names  only  are  necessary  on 
commercial    paper,    when    accompanied    by 


51 


BANK  OF  JAPAN,  TOKYO 
NIPPON  GINKO 


PUBLIC  OFFICE,  BANK  OF  JAPAN 


THE    WORLD'S     PRINCIPAL    MONETARY    SYSTEMS 


documents  or  Government  bonds.  Loans  on 
collateral  are  permitted,  but  are  not  nearly  as 
large  as  discounts  of  bills,  other  banks  doing 
more  of  that  business;  loans  to  other  than 
merchants  must  be  registered. 

Discount  rates  are  usually  low,  about  3  and 
3^  per  cent.  A  6  per  cent,  rate  was  fixed 
temporarily  during  the  1907  panic;  but  in 
ten  years  the  rate  has  altered  only  22  times. 

The  Minister  of  Finance  has  a  voice  in  fixing 
the  rate. 

It  is  clear  that  the  system  makes  for  stability, 
and  Belgium  thus  has  as  stable  conditions  as 
France,  although  not  nearly  as  strong.  The 
influence  of  the  Government  unquestionably 
contributes  to  the  condition  and  the  elasticity 
of  the  system  makes  it  adaptable  to  the  needs 


at  any  time.  Efficient  administration  is  en- 
titled to  a  large  share  of  the  credit. 

A  statement  of  the  Bank  is  appended, 
amounts  in  francs. 

The  Bank  also  carries  on  a  sort  of  safe 
deposit  business  in  which  it  reports  some 
3,500,000,000  francs  of  assets. 

It  will  be  noted  that  the  coin  and  bullion  in 
the  statement  does  not  equal  20  per  cent,  of 
the  liabilities;  it  is  frequently  the  case,  but 
when  foreign  bills  are  included  the  legal  ratio 
is  reached. 

Other  reporting  commercial  banks  have  about 
2,000,000,000  francs  assets;  private  banks  are 
numerous  and  important;  savings  banks,  chiefly 
governmental,  show  930,000,000  francs  of  de- 
posits.   There  are  also  agricultural  loan  banks. 


NATIONAL  BANK  OF  BELGIUM 


Liabilities 

Capital 50,000,000 

Surplus 28,000,000 

Notes 900,000,000 

Deposits  and  Current  Accounts 1 10,000,000 

Other 137,000,000 

Total 1,225,000,000 


Assets 

Coin  and  Bullion 203,000,000 

Foreign  Bills 145,000,000 

Bills  Discounted 525,000,000 

Loans 2x5,000,000 

Other 137,000,000 

Total 1,225,000,000 


The  Japanese   System 


Coins 

JAPAN  adopted  the  gold  standard  for  coin- 
age in  1897.  The  unit  is  the  yen  of  100 
sen.  Prior  to  that  change  in  standard 
the  bi-metallic  system  rated  the  yen  at 

99.7  cents;  as  silver  had  declined  about  one- 
half,  the  value  of  the  unit  was  cut  in  two,  to 

49.8  cents.  In  gold  it  weighs  12.86  grains  .900 
fine,  too  small  to  be  coined;  silver  for  sub- 
sidiary coin  is  .800  fine. 

Paper  Currency 

In  some  respects  Japan's  experience  with 
paper  has  been  very  like  our  own.  She  com- 
plimented us  mistakenly  in  1872  by  adopting 
our  national  banking  system;  there  were  also 
other  banks  without  issue  power,  like  our 
state  banks;  and  the  Government  also  issued 
notes.  By  1882  the  system  was  found  very 
unsatisfactory. 

To  provide  elasticity  of  currency  and  thus 
reduce  discount  rates,  the  reform  took  the 
shape  of  a  central  bank  of  issue,  continuing 


the  other  banks  without  note-functions.  It  has 
proved  remarkably  successful.  A  powerful 
bank  to  regulate  foreign  trade  was  then  also 
created  with  very  satisfactory  results.  The 
government  notes  have  been  retired. 

The  Bank  of  Japan  has  an  authorized  capital 
of  60,000,000  yen,  paid  up  37,500,000  yen;  the 
Government  took  part  thereof  to  help  it  start, 
and  it  has  always  maintained  a  direct  influence 
in  the  control.  Thus  it  appoints  the  chief 
officers;  also  the  directors  from  among  nomi- 
nees of  the  shareholders,  and  it  retains  the 
power  of  vetoing  any  acts  of  the  managers 
regarded  detrimental  to  it. 

Note-issuing  is  modeled  somewhat  on  the 
German  plan.  Thus  the  Bank  may  issue  to 
any  amount  upon  coin  in  bank;  120,000,000 
yen  upon  securities  or  commercial  paper  dis- 
counted; beyond  that  to  any  sum  subject  to  a 
tax  of  5  per  cent,  per  annum.  There  is  no 
fixed  reserve  requirement. 

The  Bank  rediscounts  for  others  and 
dominates  the  rate  for  loans.  It  reports 
briefly  each  week  and  comprehensively  at  the 
end  of  the  year. 


53 


THE    WORLD'S     PRINCIPAL    MONETARY    SYSTEMS 


Deposit  Currency 

Checks  are  coming  into  greater  use,  as 
indicated  by  the  clearing-house  returns; 
8,211,000,000  yen  cleared,  1910,  compared 
with  5,532,000,000  yen  in  1905.  In  view  of 
this,  a  law  of  1890  provided  for  some  regulation 
of  banks,  but  not  as  to  reserves.    The  statis- 


tics appended  show  that  the  other  commercial 
banks  are  important  and  increasingly  so. 

As  an  example  of  the  effect  of  the  system 
upon  discounts,  the  reduction  of  the  average 
rate  at  Tokio  from  9.7  per  cent,  in  1902  to 
5.8  per  cent,  in  191 1  is  cited.  The  Bank's 
rate  has  been  at  about  5  per  cent,  in  recent 
years. 


Banking  Statistics,   In  Yen 

BANK   OF  japan 


Liabilities 

Capital 37,500,000 

Surplus 26,560,000 

Notes 401,600,000 

Deposits 280,800,000 


Assets 

Gold 222,400,000 

Securities 179,200,000 

Discounts 102,600,000 

Loans 40,300,000 


The  deposits  are  largely  government  funds. 

ONE  THOUSAND,  SIX  HUNDRED  AND  FIVE  COMMERCIAL  BANKS 


Capital 316,700,000       Loans 536,000,000 

Surplus 96,800,000       Discounts 623,600,000 

Deposits 1,141,400,000 


The  separate  bank  for  foreign  trade  shows  its  status  as  follows : 

YOKOHAMA  SPECIE  BANK 


Capital 30,000,000 

Surplus  and  Profits 20,800,000 

Deposits 141,800,000 

Acceptances,  &c 116,100,000 


Discounts 88,300,000 

Bills  Receivable,  &c 169,000,000 

Securities 20,100,000 

Cash  and  Due  from  Banks 27,400,000 


There  are  mortgage,  agricultural,  industrial  and  colonial  banks. 
Savings  banks  show  deposits  nearly  300,000,000  yen. 


Canada's    System 


Coin 


THE  actual  standard  coin  of  the  Dominion 
is  the  gold  dollar  identical  with  that  of 
the  United  States,  although  British  gold 
coin  is  also  legal  tender;  since  there 
has  been  no  mint  until  quite  recently,  the  gold 
coin  in  use  has  been  actually  that  of  the 
United  States;  subsidiary  silver  pieces  were 
coined  in  Great  Britain  for  special  use  of  the 
colony. 

Paper  Currency 

The  Dominion  issues  legal-tender  notes, 
something  like  the  greenbacks  in  the  United 
States,  against  which  there  is  a  coin  reserve: 
up    to    $30,000,000    there    must   be    15    per 


cent,  gold,  and  85  per  cent.  Dominion 
bonds;  beyond  that  sum  gold,  100  per  cent. 
There  are  about  $100,000,000  of  these  notes 
out,  of  which  70  per  cent,  are  accordingly, 
gold  certificates.  The  notes  are  used  largely 
by  banks  in  reserves,  and  are  redeemable  in 
gold. 

The  bank-note  system  is  in  almost  every 
respect  most  perfectly  adapted  to  needs;  but 
this  excellence  was  reached  only  after  much 
tribulation.  Prior  to  the  federation  of  the 
provinces  (1867)  there  had  existed  local 
chartered  banks  which  issued  notes  largely 
without  due  restraint,  as  in  the  United  States; 
then  the  bond-security  plan  was  adopted;  it 
was  also  contemplated  at  one  time  to  supersede 


54 


THE    WORLD'S     PRINCIPAL    MONETARY    SYSTEMS 


the  banknotes  with  Dominion  notes,  but  the 
banks  refused  to  surrender  their  privileges. 

Sundry  patchwork  laws  followed  in  the  70s 
and  80s,  during  which  periods  the  banks  them- 
selves corrected  many  defects,  developing  the 
present  elaborate  branch-bank  system,  which 
was  finally  legally  estabhshed  by  an  act  of 
1890,  perfected  by  several  statutes  since,  the 
latest  in  191 1. 

There  are  now  28  banks  having  some  2300 
branches,  every  hamlet  in  the  Dominion  being 
thus  served  in  a  satisfactory  and  most  econo- 
mical manner. 

The  salient  provisions  of  the  law  are: 

Minimum  capital  $500,000,  half  paid  in; 
$250,000  cash  deposited  with  Government; 
approval  of  Treasury  board. 

Note-issue  allowed  up  to  amount  of  paid-up 
capital  purely  on  credit;  denominations  not 
under  $5;  must  redeem  notes  at  head  office 
and  at  branches  in  chief  commercial  centers. 
No  reserves  required  against  either  notes  or 
deposits,  but  a  5  per  cent,  redemption  fund  for 
notes  is  required  to  be  deposited  with  the 
Government. 

Notes  are  a  first  lien  on  assets,  and  share- 
holders are  doubly  liable. 

Monthly  reports  are  required,  but  no  exam- 
ination is  provided  for  by  law. 

A  general  supervision  is  exercised  by  the 
Canadian  Bankers'  Association,  an  incor- 
porated body. 

Since  1908,  an  act  permits  issues  of  "emer- 
gency currency"  from  Oct.  i  to  Dec.  31  each 
year,  to  15  per  cent,  in  excess  of  capital  and 
surplus,  taxed  at  5  per  cent,  per  annum. 

It  is  thus  a  system  of  purely  asset  currency, 
with  only  slight  Government  supervision. 

Charters  are  for  20  years.  Loans  are  not 
restricted,  but  banks  are  peculiarly  well 
protected  by  the  law  respecting  liens  on  pro- 
perty of  borrowers. 

Deposit  Currency 

In  Canada  checks  are  used  extensively, 
hence,  deposit-currency  plays  an  important 
part  in  the  system,  and  is  well  regulated  despite 
the  absence  of  reserve  laws;  in  practice  each 
bank  fixes  a  reserve  ratio  for  itself  and  holds 
to  it.  The  managers  are  all  trained  bankers, 
and,  thus,  are  considered  to  need  less  fixed 
restraint. 

The  per  capita  money  supply  is  placed  at 
$30.92;  deposits  in  the  28  banks  run  to  $156 
per  capita.  The  gold  supply  is  figured  at 
$110,000,000,  almost  all  of  which  is  in  the 
banks,  or  in  the  Treasury  behind  Dominion 
notes. 


Results  in  Operation 

Canada  is  thus  provided  with  a  system 
which  assures  soundness  and  elasticity  of 
volume  to  the  currency;  the  supply  is  auto- 
matically adapted  to  the  needs,  the  value 
measure  is  rendered  stable.  These  results  are 
accomplished,  first,  by  the  practice  of  issuing 
notes  only  as  demands  for  loans  and  discounts, 
or  needs  of  depositors,  arise;  second,  by  the 
practice  of  each  bank  to  promptly  return  for 
redemption  all  notes  of  every  other  bank; 
third,  the  mutual  guarantee  of  notes  by  all  the 
banks  through  the  redemption  fund;  finally, 
the    conservative    and    expert    management. 

Not  in  twenty  years  has  there  been  a  call 
for  the  redemption  of  a  single  note  from  the 
guarantee  fund. 

No  bank  can  keep  out  its  notes  in  excess  of 
the  demand,  because,  when  not  in  actual  use 
the  notes  reach  other  banks  and  are  at  once 
sent  for  redemption  in  specie  or  Dominion 
notes;  this  redemption  is  apt  to  cost  more  than 
the  gain  derived  from  any  attempt  to  force 
the  notes  into  circulation;  such  forcing  is, 
moreover,  regarded  there  as  a  violation  of 
cardinal  principles  of  banking. 

Discount  rates  are  in  general  lower  than  in 
the  United  States,  but  what  is  more  important, 
the  variation  between  the  rate  in  the  money 
centers  and  the  distant  towns  is  trifling, 
whereas  in  the  United  States  the  variation  is 
very  great.  Yet  conditions  are  strikingly 
similar;  there  is  a  great  territory  to  be  served; 
diverse  interests  with  agriculture  dominant; 
seasonal  demands  for  cash  are  the  same.  The 
contrast  in  results  is  due  solely  to  the  difference 
in  the  monetary  and  banking  systems.  It  may 
be  said  that  on  one  side  of  the  boundary  line 
between  the  countries  12  per  cent,  is  charged, 
while  on  the  other  the  rate  is  6  per  cent. 

The  currency  supply  is  always  lowest  about 
February  i,  and  highest  about  Novemeber  i, 
corresponding  to  the  crop  needs. 

The  Bank  of  Montreal,  established  181 7,  has 
for  years  been  the  leader  among  the  banks, 
but  in  recent  years  the  Bank  of  Commerce  has 
grown  to  a  very  good  second  in  assets,  which 
are  now  within  $8,000,000  of  those  of  the  older 
bank.  Together  they  hold  32  per  cent,  of  the 
resources  of  all. 

While  the  ratio  of  cash  to  notes  and  deposits 
is  only  about  13  per  cent.,  it  is  to  be  observed 
that  the  banks  regard  their  loans  on  call  as 
almost  equal  to  cash ;  and  it  is  also  to  be  borne 
in  mind  that  nearly  half  the  liabilities  are  in 
time  deposits,  which  makes  the  call  loans 
fairly  liquid  assets  for  their  protection. 
Counting  notes,  public  deposits  due  to  banks, 


THE    WORLD'S     PRINCIPAL    MONETARY    SYSTEMS 


and  demand  deposits  as  immediate  liabilities, 
the  ratio  of  cash  is  over  27  per  cent. 

It  is  interesting  to  learn  that  a  very  sub- 
stantial part  of  the  call  loans  abroad  will  be 
found  in  the  New  York  stock  market. 


In  Canada  trust  companies  are  not  per- 
mitted to  conduct  banking  business.  Savings 
banks  are  both  private  and  governmental; 
the  former  hold  about  $36,000,000,  the  latter 
about  $57,000,000  of  deposits. 


STATEMENT  OF   CANADIAN   BANKS,  MARCH,    191 2 


Liabilities 

Capital,  paid  up $111,173,000 

Surplus 99,234,000 

Notes  in  circulation 95,918,000 

Public  Deposits 36,818.000 

Deposits,  Demand 331,896,000 

Deposits,  Time 606,045,000 

Deposits,  Abroad 84,737,000 

Due  to  Banks 20,103,000 

Other 13,203,000 

Capital  Subscribed,  Unpaid 1,455,000 

Excess  Assets 14,277,000 

Total  Assets $1,414,859,000 


.Assets 

Specie $36,028,000 

Dominion  Notes 96,735,000 

5%  Redemption  Fund 5,818,000 

Notes  and  Checks  on  Other  Banks 50,751,000 

Securities 93,989,000 

Due  from  Banks 63,121,000 

Loans,  Current,  Canada 818,287,000 

Loans,  Current,  Abroad 34,209,000 

Loans,  Call,  Canada 69,846,000 

Loans,  Call,  Abroad 94,667,000 

Real  Estate,  &c 36,280,000 

Other 15,128,000 

$1,414,859,000 


Mexico's   System 


Coin 


y4FTER  having  been  a  silver-standard 
/-\  country  for  centuries,  as  the  greatest 
-^  ^  producer  of  the  white  metal,  Mexico 
in  1905  adopted  the  novel  system 
of  having  a  gold  standard  with  silver  cur- 
rency for  the  people;  establishing  a  sub- 
stantial gold  redemption  fund  to  enable  the 
exchange  of  silver  for  gold  at  the  fixed  valua- 
tion, so  as  to  prevent  depreciation  and  fluctua- 
tion, which  had  been  the  condition  prior  to 
the  reform. 

The  unit  of  coinage  is  the  peso  containing 
12.85  grains  of  gold  .900  fine,  hence,  valued 
at  49.8  cents. 

Paper  Currency 

Prior  to  1897  there  was  a  lack  of  uniformity 
in  the  constitution  and  regulation  of  issue 
banks.  Then  the  Federal  Government  under- 
took central  regulation.  Notes  are  now  issued 
by  24  banks  located  in  the  several  states; 
but  the  National  Bank  is  by  far  the  most 
important  and  the  leader  in  the  system. 

The  issue  banks  must  have  at  least  i  ,000,000 
pesos  capital,  half  paid  up;  they  must  deposit 
20  per  cent,  of  the  capital  in  Government 
bonds;  charters  may  not  run  for  more  than  30 
years.  In  fact,  however,  this  "free-banking" 
law  is  suspended  until  1822,  as  there  was  a 
disposition  to  increase  the  number  unduly. 


They  may  issue  notes  to  thrice  the  paid-up 
capital,  but  must  have  a  reserve  of  50  per  cent, 
against  both  notes  and  other  demand  lia- 
bilities, including  deposits.  A  government 
official  is  located  in  each  bank's  head  office; 
he  keeps  check  on  the  note-issues,  and  counter- 
signs the  notes,  so  that  the  law  is  carefully 
observed.    The  notes  are  not  legal  tender. 

The  banks  operate  through  branches,  and 
are  under  strict  supervision  by  the  Govern- 
ment. Monthly  statements  and  full  annual  re- 
ports are  required. 

Deposit  Currency 

is  an  insignificant  factor;  the  commercial 
development  of  the  country  has  been  slow; 
yet  it  has  prepared  for  such  an  evolution  in  its 
laws,  as  the  reserve  requirement  mentioned 
above,  and  the  inspection  system,  show.  The 
money  supply  is  estimated  at  $9.98  per 
capita. 

Separate  banks  are  created  under  the  law 
for  mortgage  loans  and  another  class  for 
financing  purposes.  There  are  also  numerous 
private  banks. 

The  National  Bank  has  about  40  per  cent, 
of  the  total  business.  Promotion  banks  have 
about  130,000,000  pesos  of  resources,  mortgage 
banks,  55,000,000.    There  are  no  savings  banks. 

The  issue  banks  show  debts  and  means 
approximately  as  follows,  amounts  being 
given  in  pesos: 


56 


THE    WORLD'S    PRINCIPAL    MONETARY     SYSTEMS 

MEXICAN  BANKS 


Capital 1 18,000,000 

Surplus 55,000,000 

Demand  Deposits 70,000,000 

Term  Deposits 60,000,000 

Notes 112^000,000 

Current  Accounts 50,000,000 

Other 40,000,000 

Total 505,000,000 


Gold 55,000,000 

Other  Cash 35,000,000 

Discounts 92,000,000 

Loans 60,000,000 

Securities 60,000,000 

Current  Accounts 170,000,000 

Other 33,000,000 

Total 505,000,000 


Illustrative   Comparative   Statements 


To  illustrate  the  working  of  the  systems 
of  the  four  chief  countries  of  Europe, 
the  following  figures  are  presented,  the 
amounts    being    stated    in  millions  of 
dollars.      The  period  covered  is  from  Septem- 
ber, 1911  to  March,  1912.     The  discount  rate 
reflects  changes  in  condition. 

Th€  tables  show  the  quarterly  (and  par- 
ticularly the  annual)  settlement  needs;  note 
the  expansion  in  December  in  each  case. 


It  should  be  borne  in  mind  that  the  Austrian 
Bank  is  not  compelled  to  redeem  notes  in 
gold  coin. 

The  sharp  advance  in  the  discount  rate  in 
October  was  due  to  the  political  crisis  between 
Germany  and  France  over  Morocco.  France 
withdrew  funds  loaned  in  Germany,  which 
then  resorted  to  London,  and  finally  to  New 
York.  Altogether  France  exhibits  the  greatest 
stability. 


BANK  OF  ENGLAND 


BANK  OF  FRANCE 


End  of 


Sept. . . 
Oct.... 
Nov. . . 
Dec. . . 

Jan 

Feb... 
March . 


Gold 

Notes 

Deposits* 

Reserve* 

Rate  % 

Gold 

207 

145 

279 

155 

3 

622 

182 

146 

248 

128 

4     1 

629 

i«5 

143 

258 

135 

4 

642 

172 

145 

329 

118 

4 

634 

191 

141 

246 

142 

4 

639 

200 

139 

331 

153 

3K 

646 

191 

143 

325 

141 

2,'A 

650 

Notes         Loans        Rate  % 


1066 
1099 
1090 

1 145 
1093 
1016 
1051 


282 
343 
319 
279 

309 
285 
380 


3 

i% 
lA 
3^ 
iA 
3^ 


BANK  OF   GERMANY 


AUSTRO-HUNGARIAN  BANK 


End  of 


Sept . . . 
Oct.... 
Nov. . . 
Dec. . . 

Jan 

Feb... 
March . 


Coinf 

Notes 

Loans 

Rate  % 

Taxed 
Notes  1 

242 

558 

456 

4 

126 

255 

466 

349 

5 

65 

269 

427 

311 

5 

245 

547 

464 

5 

114 

288 

418 

286 

5 

297 

391 

285 

5 

i 

280 

511 

429 

5 

38   iJ 

Coinf         Notes         Loans       Rate  % 


324 
318 
318 
319 
322 

324 
319 


504 

521 

485 
515 
474 
459 
467 


239 
268 

237 
269 
213 

215 
212 


*  Deposits  and  reserves  shown,  as  more  significant  than  loan  items,  which  are  not  distinctly  reported. 
f  A  substantial  part  of  the  coin  is  silver,  not  separately  stated  in  the  case  of  Germany. 


For  a  comparison  between  United  States 
national  banks  and  Canadian  banks,  at  dates 
nearest  the  calls  of  Comptroller  of  Currency, 


the  following  table  is  given,  the  amounts  being 
stated  in  millions  of  dollars: 


57 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 
UNITED   STATES  CANADIAN 


1911 


Notes       Deposits       Loans     j  Reserves        Notes       Deposits       Loans       Reserves 


Mch.  7 681 

June   7 682 

Sept.  1 697 

Dec.    5 703 

1912 

Feb.  20 704 


5305 
5478 
549° 
5536 

5630 


5558 
5611 
5663 
5659 

5810 


^Maximum  Canadian  note-issue  in  October, 
107  millions;   then  began  to  diminish. 

Under  the  Canadian  system  it  is  not  neces- 
sary to  curtail  loans  because  the  reserves  are 
reduced.  The  greatest  absurdity  is  shown, 
however,  in  the  movement  of  the  volume  of 
notes  in  the  United  States,  compared  with  that 
in  Canada.  Note  particularly  the  increase  in 
the  former  in  February,  when  demands 
slacken,  and  the  decrease  in  the  latter. 


908 
946 
895 
863 

950 


80 
82 

91 
102 


932 

959 

1004 

1003 


871 
888 
932 
969 

989 


110 
118 
121 
138 

134 


To  illustrate  how  the  three  chief  systems 
act  under  the  influence  of  panic,  the  following 
tables  are  presented,  amounts  being  again 
stated  in  millions  of  dollars.  The  period  cov- 
ered is  from  October,  1907  to  January,  1908. 
Panic  conditions  first  manifested  themselves 
in  the  United  States  about  the  middle  of 
October,  but  the  great  banks  had  anticipated 
them  in  a  measure. 


ba:* 

TK  OF  ENGLAND 

Date 

Gold 

169 
154 
156 
149 
157 
174 

TVT  t           Loans, 
Notes    ,      ^^_*' 

Reserve 

Rate,  % 

Oct.   19 

Nov.    2 

Nov.  30 

Dec.  28 

Jan.     4 

Jan.    18 

143 
143 
141 
144 
144 
138 

339 
408 

387 
392 
41S 
332 

114 

lOI 

106 

95 
104 
126 

4K 

7 
7 
6 

5 

London's  free  market  for  gold  causes  a 
concentration  of  demand  upon  its  Bank, 
and  hence  rates  are  necessarily  raised  to 
.  points  beyond  those  of  the  Bank  of  France. 
Note  the  substantial  accumulation  of  gold 
after  the  crisis  passed. 

'  The  item  includes  discounts  as  well  as  loans  on  securities,  the  former  not  being  separately  stated. 

BANK  OF  FRANCE 


Date 


Oct.  3 
Oct.  31 
Nov.  28 
Dec.  26 
Jan.  2 
Jan.    23 


Gold 


535 
538 
521 
519 
S16 
518 


I 
Notes       Discount 


948 
965 
930 
927 
968 

943 


358 
350 
359 
346 
416 
345 


Rate,  % 


1% 

3K 

4 

4 

4 

3 


The  Bank  had  raised  its  rate  from  3% 
before  October  19,  anticipating  trouble;  it 
came  back  to  this  rate  immediately  after 
the  crisis  subsided,  even  though  the  gold 
reserves  were  not  materially  increased. 


BANK  OF  GERMANY 

Date 

Coin* 

Notes 

Disc'ts 

Taxed 
Notes 

94 

69 

62 

64 
149 
... 

Rate,  % 

Oct.     9 

Oct.   31 

Nov.  30 

Dec.  23 

Dec.  31 

Jan.    23 

201 
203 

185 
196 
187 
244 

407 

385 
360 

373 
449 
341 

343 
338 
330 
341 
442 
271 

5K 

7>^ 

7K 
6 

Despite  the  great  increase  of  coin  and 
decrease  in  notes  and  discounts  in  January, 
the  Bank  was  constrained  to  keep  the  rate 
at  6%  for  the  time  being.    Note  the  move- 
ment of  taxed  notes. 

*  Includes  silver,  amount  not  separately  stated. 


58 


,      J*-*   •'!     **.     •,      •     •  • 


THE    WORLD'S    PRINCIPAL    MONETARY    SYSTEMS 


The  strain  at  the  turn  of  the  year  is  the  note- 
worthy feature;  France  accomplished  it  with- 
out going  above  a  4  per  cent,  rate,  increasing 
discounts  70  millions;  Germany  had  to  impose 
a  7^  per  cent,  rate  to  expand  loi  millions,  and 
Great  Britain's  expansion  of  83  millions  was  at  a 


7  percent,  rate,  the  lower  figure  having  been  fixed 
after  the  turn  of  the  year.  The  raising  of  dis- 
count rates  unquestionably  restrained  expan- 
sion, even  at  the  turn  of  the  year.  The  Bank 
of  England  lost  20  millions  gold,  net ;  the  Bank 
of  France,  22;  the  German  Bank,  16  millions. 


Summary   of  Special    Features 


No  central  bank  has  a  capital  as  high  as 
100  milhons,  that    of  the    Bank    of 
England,  about  7>^    millions,   being 
by  far  the  largest.   .  None  of  the  oth- 
ers exceed  40  millions. 

Russia,  Sweden,  and  a  few  minor  states  own 
the  entire  stock  of  their  central  banks.  In  all 
the  others  there  is  a  restriction  upon  voting 
power  to  prevent  concentration  of  control. 
In  all  except  England  the  governments  exercise 
the  power  of  appointment  of  the  management, 
particularly  the  chief  officers,  in  a  greater  or 
less  degree.  In  Switzerland  the  Government 
appoints  five-eighths  of  the  directors. 

Charters  are  never  for  as  long  as  50  years; 
in  almost  all  cases  the  term  is  20  years  or  less, 
thus  reserving  the  power  to  the  governments 
to  make  terms  for  renewals  in  accordance  with 
altered  conditions. 

In  almost  all  cases  profits  to  shareholders 
are  Umited,  and  the  governments  participate 
therein.  In  several  cases  the  governments  go 
so  far  as  to  exact  the  major  part  of  profits 
derived  from  the  raising  of  discount  rates. 
This  tends  to  keep  rates  lower  than  might 
otherwise  be  the  case.  In  a  few  instances  the 
consent  of  the  governments  must  be  had  to 
raise  rates. 

In  order  to  enable  the  banks  to  make  the 
discount  rates  fixed  by  them  effective,  they  are 
not  prohibited  from  discounting  for  individ- 
uals as  well  as  banks.  The  usual  practice  is  to 
permit  individuals  first  to  have  deposit  ac- 
counts with  the  central  banks,  to  entitle  them 
to  discounts. 

It  is  almost  universal  that  no  interest  is 
allowed  on  deposits  in  central  banks,  except 


as  to  government  funds  in  a  number  of  cases. 

While  in  the  case  of  the  most  successful' 
central  bank  (the  French)  no  rule  as  to  a 
reserve  ratio  on  liabilities  exists,  most  of  the 
charters  require  fixed  minimum  reserves;  but 
the  rigidity  of  such  reserve  requirements  is  in 
most  cases  relieved  by  the  power  to  issue  notes 
in  excess  of  the  limit  by  paying  a  tax  or 
otherwise. 

The  notes  of  the  central  banks,  as  well  as 
deposits  with  these  by  other  banks,  are  avail- 
able as  reserves  for  the  latter;  only  very  few 
of  the  latter  are  required  legally  to  hold  specific 
reserves,  even  where  the  checking  system  is 
highly  developed. 

All  central  banks  operate  through  branches 
and  agencies;  transfers  of  funds  for  other  banks 
and  individuals  at  small  charge  (or  without 
charge  in  some  cases)  are  prescribed  and  con- 
stitute a  large  part  of  the  business  in  many 
of  them. 

Central  bank  notes  are  in  many  cases  made 
legal  tender.  They  are  all  redeemable  in  coin 
on  demand  and  generally  speaking  in  gold, 
penalties  being  imposed  in  most  cases  for 
failure  to  redeem. 

Discounting  of  bills  of  exchange  is  univer- 
sally a  far  more  important  part  of  the  business 
than  loaning  on  collaterals;  and  rates  for  the 
former  are  always  lower  than  for  the  latter. 

The  concept  that  a  central  bank  is  a  pubHc 
service  institution,  created  for  the  benefit  of 
the  whole  people  and  not  only  for  the  banks, 
prevails  everywhere.  The  nations  realize  that 
their  trade  as  a  whole  is  to  be  served  to  assure 
prosperity,  and  this  purpose  is  the  chief  end  of 
the  systems. 


59 


^  > 

w  o 

<  2  ^ 

!^  -J  1 

S  <     kJ 

a'  aj    « 

S  H     D 

w  &   < 

U  w   z 

S  as 

<  H 

o  < 

w  < 


The  Estey  Piano 

BACKoftheEstey  Piano 
is  over  sixty-five  years 
of  conscientious  effort 
in  the  making  of  musical 
instruments.  Every  one  of 
those  years  of  endeavor  has 
been  one  of  betterment, 
though  the  underlying  prin- 
ciple has  not  changed.  That 
principle  has  been  applied  to 
pianos  —  the  determination 
to  build  as  good  as  any  in 
the  world  —  to  make  them 
honest  without  stinting  or 
cheapening  in  material  or 
workmanship  —  to  put  con- 
science into  them,  as  well  as 
wood,  and  strings,  and  felt 
—  and  to  sell  them  at  a 
moderate  price. 
For  over  sixty-five  years  the   Esteys  have  been  building  musical 

instruments,  and  building  better  every  year ! 

To-day  the   Estey  Piano  and  the  Estey   Player   Piano  reflect  not 

only  the  highest  integrity  in  making,  but  the  result  that  commends 

itself   to    the  judgment    of   the  careful,   conservative,   discriminating 

buyer. 

Warerooms: 

New  York,  23  West  42nd  Street  Philadelphia,  corner  Walnut  and  17th  Streets 

St.  Louis,   I  I  16  Olive  Street  Brattleboro,  Vt. 

London,  12  Rathbone  Place,  Oxford  Street 

Factory: 

1 1  2- 1  24  Lincoln  Avenue  and  271-289  East  133d  Street 
New  York  City 


STYLE  LOUIS  XV  TINY  GRAND 

Length,  5  feet.     Width,  4  feet  8  inches.     Made  in  Mahogany. 
Other  woods  to  order. 


A  Year  of  Remarkable  Growth 

THIS  Company's  business  has  received  a  splendid  impetus  during 
the  past  year.     The  great  plant  at  Niagara  Falls,  although  less  than 

two  years  old  and  noted  for  its  size  and  completeness  has  been  found 
inadequate  to  meet  the  growth  of  the  business.  Within  ninety  days  the 
floor  space  and  capacity  have  been  doubled. 

A  new  product  for  the  automobile  field  has  been  brought  out — an 
Electric  Starter  and  Lighter.  This  new  product  fits  in  perfectly  with  the 
class  of  engineering  and  manufacture  carried  on  heretofore. 

A  trade  name  has  been  adopted  for  common  application  to  all  our 
products  which  are  now  widely  advertised  and  sold  under  this  trade-mark. 


Products  for  Railway  Field 

Axle  Equipment  for  Electric  Light  on  Cars^over  6000  of  these 
are  now  in  service. 

Storage  Batteries  to  operate  Automatic  Safety  Signals  used  in  Block 
Systems.     The  Storage  Battery  method  is  now  recognized  as  the  best. 

Products  for  Automobile  Field 

Electric   Starter   and    Lighter   for   Gasoline   Automobiles.      The 

U-S-L  equipment  is  the  one  which  does  away  with  the  fly-wheel.  It  has 
taken  automobile  manufacturers  by  storm — adopted  as  standard  equipment 
for  many  leading  makes.     We  have  sold  our  capacity. 

Storage  Batteries  to  drive  Electric  Cars  and  Commercial  Trucks. 

Our  cities  aire  due  for  a  revolution  in  transportation  methods  and  electric 
trucks  are  fast  coming  into  favor  because  of  economy.  This  line  is 
gaining  steadily. 

Products  for  Power  Installations 

A  great  many  classes  of  power  plants  require  storage  batteries.  U-S-L 
Batteries  have  demonstrated  their  superiority  for  this  work  and  their  sale 
is  growing  rapidly.  •  . 

U-S-L  Products  Excel  and  U-S-L  Business  Grows. 

We  would  be  glad  to  have  you  visit  our  factory. 

The  U.  O.  Light  &  Heating  Co^ 

General  Offices:  Factory: 

30  Church  Street,  New  York  Niagara  Falls,  N.  Y.        .• 

Branch  Offices  and  Service  Stations 
Boston       Buffalo       Cleveland       Detroit       New  York       Chicago       St.  Louis        San  Francisco 


i;fc 


e  purpose  of  a  jouitk^ 
is  not  only  to  arrive^' 
at  the  goal ,  out  to  find 
enjoyment  on  the  wciy 


HENRY  VAN  DYKE 


^IJOYMENT  ON  THE  WAY  is  assured 
to  all  who  travel  via  the  New  York 
1^,^^  /Central  Lines.  The  gradeless  ''Water 
'  '^  Level  Route"  insures  solid  comfort 
b^  ay  and  refreshing  sleep  by  night.  The 
scenic  beauties  of  the  Hudson  and  the  Mohawk 
Valleys  and  the  shores  of  the  Great  Lakes  are 
a  constant  delight  to  the  eye.  The  luxurious 
modern  equipment  and  courteous  service — 
affording  every  convenience  of  home,  club 
ai  make  your   enjoyment    complete. 

20th  Century 
Limited 


This  world-famous  overnight  train  between 
New  York  and  Chicago  saves  a  business 
day.  Its  equipment  is  the  recognized  stand- 
ard for  train  service  throughout  the  world. 

Lv.  New  York  4.00  p.m.  Lv.  Chi^go  -  2.30  p.m. 
Lv.  Boston  -  1.30  p.m.  Ar.  Boston  -11.50  a.m. 
Ar.  Chicago  -  8.55  a.m.       Ar.  New  York  9.25  a.m. 

Railroad  and  Pullman  tickets  delivered  by  special  Mes- 
senger without  extra  charge.  For  further  information 
address  Gen'l  Eastern  Pass.  Agent,  1216  Broadway. 

New  York 'Phone:  6310  Madison  Brooklyn  'Phone:  167  Main 


''Water 
Level 
Route'* 


,   NEWYORK   . 

Central 

'       LINES       ' 


You 
Can 
Sleep 


Irving  National  Bank 


NEW  YORK 

STATEMENT,  July  31,  1912 
ASSETS 


Immediately  available 
Cash  in  Vault  and  Checks  for  Clearings 
Due  from  Correspondents  and  Demand  Loans 

Available  within  30  days 

Loans  Due  in  30  Days 

United  States  Bonds  .         -         .         . 

Other  Bonds  and  Investments       -        .         . 

Other  loans  and  discounts 
Due  Within  4  Months          -         _         -         . 
Due  After  4  Months 


$12,049,509.18 
15,302,351.82 

4,965,875.95 

-   1,527,752.20 

2,479,043.82 

13,267,076.40 
3,357,757.94 


LIABILITIES 


CAPITAL     -        -        -        - 

SURPLUS  AND  PROFITS 

Circulation      -        -        -        _ 

T>        ..„   j  Individual 
Deposits      g^j^^  ^        _ 


$27,351,861.00 


8,972,671.97 


16,624,834.34 


$52,949,367.31 


$23,330,363.06 
21,468,872.31 


$4,000,000.00 
3,071,331.94 
1,078,800.00 

44,799,235.37 


$52,949,367.31 


DIRECTORS 

LEWIS  E.  PIERSON,  President 
F.  A.  M.  BURRELL 

Vice-Pres.  Charles  A.  Schieren 

Co.,  Leather 
M.  M.  BELDING.Jr. 

President  Belding  Bros.  CSfc  Co., 

Mfrs.  Sewing  Silk 
WILLIAM  H.  BARNARD 

Treas.   Mason-Seaman    Trans- 
portation Company 
WILLIAM  C.  BREED 

of  Breed,   Abbott    CS,    Morgan, 

Counsel  lors-at-Law 

WARREN  CRUIKSHANK 
President  Cruikshank  Company 

JAMES  M.  DONALD 

Chairman  Hanover  Nat.  Bank 

ROBT.  L.  GERRY,  Newport,  R.  I. 

WM.  HALLS,  Jr..  Summit,  N.  J. 

LEE  KOHNS 

of  L.  Straus  <&  Sons,  Art  Pottery 

and  Glassware 
JOHN  G.  LUKE 

President  'West  Virginia  Pulp 

and  Paper  Co. 
GERRISH  H.  MILLIKEN 

of  Deering,  Millikcn  C&  Co.,Com- 

mission  Dry  Goods 
SIDNEY  Z.  MITCHELL 

Pres.  Electric  Bond  CSl.  Share  Co. 
DANIEL  P.  MORSE 

Pres.  Morse  C5i  Rogers,  Whole- 
sale Boots  and  Shoes 
ROLLIN  P.GRANT,  Vice-Pres. 


OFFICERS 

Lewis  E.  Pierson,  President 
James  E.  Nichols,  Vice-President 
Rollin  P.  Grant,  Vice-President 
"Willis  G.  Nash,  Vice-President 
Benj.  F.  Werner,  Vice-President 
Charles  H.  Imhoff,  Vice-President 
Emil  Klein,  Vice-President 
Harry  E.  Ward,  Cashier 
D.  H.  G.  Penny,  Ass't.  Cashier 
RichardJ.  Faust, Jr.,  Ass't.  Cashier 
J.  Franklyn  Bouker,  Ass't.  Cashier 
Samuel  Redfem,  Ass't.  Cashier 


DIRECTORS 

JAMES  E.  NICHOLS, 

of  Austin,  Nichols  6t  Co.,  Whole- 
sale Grocers;  Vice-President. 

CHARLES  E.  PERKINS, 
President  J.  T.  Perkins  Co.,Yarns 

JACOB  H.  SCHOONMAKER, 
Secretary     Butler    Bros.,    Inc., 
Wholesale  GeneralMerchandise 

EDWARD  R.  STETTINIUS, 
President  Diamond  Match  Co. 

WILLIAM  SKINNER, 
of  William    Skinner    &    Sons, 
Silks. 

JOHN  H.  SEED, 
Brooklyn,  New  York 

S.  FREDERIC  TAYLOR 
President    Bordens    Condensed 
Milk  Co. 

WILLIAM  A.  TILDEN, 
President    Fort    Dearborn    Na- 
tional Bank,  Chicago,  Illinois. 

GUST  A  V  VINTSCHGER, 
President  Markt  &  Hammacher 
Co.,  Import  and  Export. 

THEODORE  F.  WHITMARSH, 
Vice-President  F.  H.  Leggett  & 
Co.,  'Wholesale  Grocers. 

DANIEL  W.  WHITMORE, 
of    D.    W^.    'Whitmore    &    Co., 
Wholesale  Diary  Produce. 

FRANK  W.  WOOL  WORTH, 
Piresident  F.  W^.  WoolworthCo. 
Five  and  Ten  Cent  Stores. 

WILLIS  G.  NASH, Vice-President 


STRICTLY  A  COMMERCIAL  BANK 
Our  new  location  will  be  in  the  WOOLWORTH  BUILDING 


GAYLAMOUNT 

PAMPHLET  BINDER 

Manu/aclurtJ  iy 

GAYLORD  BROS.  I«e. 

Syr<cui*,  N.  Y. 

Stockton,  Calif. 


14  DAY  USE  I 

RETURN  TO  DESK  FROM  WHICH  BORROWED     U 

LOAN  DEPT. 

This  book  is  due  on  the  last  date  stamped  below,  or 

on  the  date  to  which  renewed. 

Renewed  books  are  subject  to  immediate  recall. 


,,ouV63B6 


3l0st'63B^ 


fo^ocllis 


7^ 


17.C1 


RfclC'D  LP 

DEC   j[-63-6t 

X?  JAN'84Ag 

— ^gc-n  LP 


D£02  0 


'^-mt 


m 


